Steel giant ArcelorMittal’s (MT) German unit gained European Commission approval to purchase German coke producer Kokerei Prosper.
Kokerei Prosper is currently owned by RAG Aktiengensellschaft. It produces coke that it sells to steel manufactures, such as ArcelorMittal Bremen. It also sells by-products of the coke production process to different customers outside the steel industry.
The Commission's investigation showed that the proposed transaction does not give rise to competition concerns as far as the market for coking coal is concerned.
The Commission further assessed the effects of the operation on the market for coke by-products (crude coal tar and crude benzene) and concluded that the transaction will not impede competition on these markets.
Recently, ArcelorMittal also expanded its mining operations in Quebec with an investment of C$2.1 billion ($2.2 billion). The expansion will likely create 8000 jobs during construction and more than 900 permanent jobs once completed.
The investment will allow ArcelorMittal Mines Canada to increase its annual production of iron ore concentrate from 14 million tonnes to 24 million tonnes by 2013. ArcelorMittal SA is a large global steel producer operating on all major steel markets in Europe and throughout the world.
Last month, ArcelorMittal reported diluted net earnings of 69 cents per share in the first quarter of 2011, surpassing the Zacks Consensus Estimate of 47 cents as well as last year’s 42 cents per share.
Total steel shipments in the first quarter of 2011 were 22.0 million metric tonnes compared with 21.0 million metric tons in the year-ago quarter.
For the second quarter of 2011, management expects EBITDA to be approximately $3.0 – $3.5 billion. Steel shipment volumes, average steel selling prices and EBITDA/ton are expected to increase sequentially, while capacity utilization levels are expected to improve to approximately 80%.
Additionally, operating costs are expected to increase sequentially due to higher raw material prices. The company also expects mining production and profitability to improve sequentially in the second quarter.
The company expects working capital requirements to be in line with the increased activity levels and prices resulting in further increase in net debt in the second quarter. The company expects its full-year 2011 capital expenditure to reach $5 billion, of which $1.4 billion is estimated to be spent on mining.
Major competitors of ArcelorMittalare are United States Steel Corp. (X) and Tata Steel Limited.
We maintain our Outperform recommendation on ArcelorMittal with a Zacks #3 Rank (Hold) on the stock.
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