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Arcelor Mittal Acquires Mexican Mill Sicartsa

RCELOR MITTAL, the world's largest steelmaker, has gotten a bit bigger with the acquisition of Sicartsa, a Mexican steel producer, from Grupo Villacero tor approximately $1.4 billion. The deal is expected to close during the first quarter. Sicartsa is a fulJy integrated producer of long steel, with an annual production capacity of approximately 2.7 million tons from its facilities in Mexico and Texas. Through its wholly owned mine, linked directly to tbe plant via a slurry pipeline, Sicartsa has estimated iron ore reserves of 160 million tons, providing 30 years of

reserves at current production rates. Arcelor Mittal has also entered into a 50-50 commercial joint venture with Grupo Villacero for the distribution and trading of Arceior Mittal long products in Mexico and in the southwestern U.S., capitalizing on Villacero's commercial network. This is Arcelor Mittal's first acquisition since the merger ofthe two steel giants created the company last year, and demonstrates the synergies the deal promised, as well as the company's desire to further consolidate the steel industry, company executives say.

Arcelor Mittal expects the Sicartsa acquisition to generate $80 million of industrial synergies in addition to a further $50 million from commercial, procurement and selling, general and administrative areas. Sicartsa is sharing its production site with Mittal Steel Lazaro Cardenas, offering significant etficiencies once reunited. Prior to the privatization in 1991 that led to its separation into two entities, the Ldzaro Cardenas steelworks operated as a single integrated site producing both flat and long carbon products. Mittal Steel Lazaro Cardenas is Mexico's largest stee! producer and slab exporter. The plant has a capacity of four million tons per year. "This acquisition creates a strong and well-balanced long carbon player in the Americas. Witb tbe Mexican market expected to grow by up to 6 percent per year over tbe next 10 years, this is tbe ideal time to expand our presence in this country," says Aditya Mittal, chief financial officer at Arcelor Mittal. In other action, Arcelor Mittal has signed an understanding witb the State of Orissa, India, to pursue the greenfield construction of a steelmaking operation in the Keonijbar District. The intention of the $9 billion project is to build an integrated steel plant with a total annual capacity of 12 milhon tons. "We have always said that we want to have an operational presence in India," says Lakshmi Mittal, Arcelor Mittal president and CEO. "The Indian economy is demonstrating excellent growth, and stee! consumption is set to increase considerably in the future."

Nucor Acquires Harris Steel Group

N U C O R C O R P . , Charlotte, N.C.. is making another effort to increase downstream opportunities with the purchase of Canada's Harris Steel Group for $1.07 billion. The offer has the approval of the boards of directors from Nucor and Harris Steel Group. "The acquisition of Harris Steel Group significantly advances Nucor's downstream growth initiatives," says Nucor Chairman and CEO Dan DiMicco. "Harris Steel has been a strong partner of ours for almost three years, is a company that we know well, has a management team whom we respect, and will be a highly complementary fit with Nucor, Harris Steel provides Nucor with immediate and broad geographical reach, and with considerable scale and growth opportunities." Harris Steei has several business units, including: Harris Rebar, which is involved in the fabrication and placing of concrete reinQ Nucor has acquired Harris Steel Group, forcing steel and the design and installation of including its Fisher & Ludlow grating and concrete post-tensioning systems; Laurel Steel, expanded metal facilities. ^^.^^ -^ ^ manufacturer and distributor of wire and wire products, welded wire mesh and cold finished bar: and Fisher & Ludlow, which is a manufacturer and distributor of heavy industrial steel grating, aluminum grating and expanded metal. Harris Steel also participates in steel trading on a worldwide basis through Novosteel (owned 75 percent by Harris Steel), and in the distribution of reinforcing steel and allied products to U.S. customers through Harris Supply Solutions.

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January 2007 - METAL CENTER NEWS

METAL INDUSTRY NEWS

Chaparral Reports Another Record Quarter

C H A P A R R A L S T E E L C O . , Midlothian, Texas, reported record net income of S67.5 million for ifs second quarter ended Nov. 30. 2006. This represents a 98 percent increase in net income over the $34.0 million earned in the second quarter of fiscal 2006 and is $8.4 million better than the previous record of $59.1 million earned the previous quarter. It was the fifth-straight record earnings quarter for the Texas producer of structural steel beams and seventh straight quarter of earnings growth. Shipments of 541,000 tons were seasonably lower than the previous quarter, but were comparable to the same period of fiscal year 2006. Average selling prices of $682 per ton were up 4 percent from the first quarter of the fiscal year and nearly 18 percent better year-over-year. Though the fiscal third quarter is typically the company's slowest due to inclement weather and holidays, the overall outlook remains positive. "We are constantly monitoring domestic and international markets and both continue to be strong," says Tommy A. Valenta, president and CEO. "Based on global dynamics, we remain optimistic for the structural steel market and our financial performance in calendar year 2007."
Q Chaparral Steel, producer of structural steel beams, reported its fifth-straight record earnings quarter. (MCN file photo courtesy Chaparral Steei)

Finally, to meet the recommendations of the European Commission tor its approval of the Arcelor and Mittai combination, the company has agreed to sell two of its holdings. Arcelor Mittal agreed to divest Travi e Profilati di Pallanzeno and San Zeno Acciai to Duferco for 117 million euros ($153.2 million U.S.). Travi e Profilati di Pallanzeno, which is a 100 percent subsidiary of Arcelor, is a rolling mill located close to the Lago Maggiore in Northern Italy. The company also agreed to sell German Stahlwerk ThuHngen GmbH to Grupo Alfonso Gallardo for 591 million euros ($773.9 million U.S.). SWT, a 100 percent subsidiary of Arcelor Mittal, produces steei sections used in building and construction.

"The vote went as we expected. After months of discussions with maior investors of Wheeling-Pitt and the

United Steelworkers, we knew that replacing the incumbent board was widely viewed as a critical component

Wheeling-Pitt Shareholders Elect Esmark-Favored Board

Esmark's slate was elected to (he board of directors of WheelingPittsburgh Steel Corp. last month by a wide margin, apparently clearing the way for Esmark's acquisition of the West Virginia mill. Each of Esmark's candidates received more than 6.1 million votes to an estimated 2.8 million votes for the incumbent directors.

METAL CENTER NEWS - January 2007