Lakshmi Mittal Says Steel Producers Now Have the Opportunity to Create an Attractive and Sustainable Industry in the 21st Century EAST CHICAGO, Ind., June 21 /PRNewswire-FirstCall/ -- "The foundation now exists for the steel industry to create a sustainable business model that should over time lead to a re-rating of the sector," said Lakshmi Mittal, Chairman and CEO of Mittal Steel Company (NYSE: MT; Euronext Amsterdam) today. Speaking at the World Steel Dynamics Annual Steel Success Strategies Conference in New York, Mr. Mittal said that the steel industry proved in 2004 that it has the ability to create considerable value. Now the focus must be to ensure that it can sustain this. Mr. Mittal highlighted two fundamental changes that have occurred in the industry's dynamics in recent years. "Firstly, global demand has entered a new growth era, largely driven by China's industrialisation," he said. "Secondly significant consolidation has occurred, leading to a stronger industry." Mr. Mittal said that the biggest opportunity for GDP driven growth in steel demand in the future would come from the "BRIC" countries. "Provided the economies of these countries continue to develop at the anticipated growth rates, demand growth for the steel industry has the potential to continue at around 3 - 5% over the foreseeable future," he said. Responding to concerns that given China's rapid expansion in its own capacity, it may soon become a net exporter, Mr. Mittal said he is now less concerned that the Chinese industry remains a threat having witnessed the Chinese government's stringent control regarding capacity increase. He also highlighted that China is not a natural exporter of steel as it has a number of weaknesses, including a dependency on iron-ore imports and high energy costs, which make it difficult to argue the case for any long-term structural advantage. He highlighted India as being a market of particular opportunity on the basis of its large population and current low per capita steel consumption, provided that the country pushes forward with its economic reform. "The growth opportunity is certainly there," he said. "Good progress is being made and GDP growth has been stepped up significantly in recent years, now within sight of achieving the goal of 8% growth. However the pace at which this transformation is occurring needs to be accelerated and the government needs to commit resources and energy into industrialisation and building the infrastructure. Provided such economic reform can be implemented there is a strong possibility for India to continue to drive global steel demand growth." In order to take advantage of these sound fundamentals, Mr. Mittal said that the industry must continue to move forward with consolidation. "Cyclicality in the steel industry will never disappear in its entirety," he said. "Nevertheless it can and should be managed." He said better management of the supply chain would help address cyclicality and that this would come with further consolidation. "Today's softening of the market is not due to any sudden drop in demand but due to an inventory overhang situation created in the market. This situation can be better managed with consolidation of the industry." Mr. Mittal said good progress had been made towards consolidation, particularly in North America and Europe where approximately 60% of the market is now produced by the top five companies. "Both of these markets have made significant progress towards consolidation," he said. "However the overall industry is highly fragmented and needs further consolidation." He also said that companies must continue to think globally. "The consolidation trend has taken place on three continents, but to date it has been largely regionally driven. What needs to happen now is more global consolidation." He repeated his statement that he believes 3 - 4 companies producing between 80 - 100 million tonnes need to emerge, with a footprint in all the main global regions. "The top ten producers should comprise at least forty percent of total market share," he said. He also stated that for global consolidation to really accelerate, there would also need to be an end to the nationalistic feelings that have historically dominated the steel industry. "I would urge countries which have not yet embraced privatisation of the steel industry to press ahead with such reform and have confidence that it will bring many benefits to the country and its economy," he said. Mr. Mittal said that whilst consolidation would be key to building a sustainable model for the steel industry, it alone would not resolve the historical problems. "Consolidation will help the industry to better manage supply and demand," he said, "But a change in management style and thinking and a more market focussed approach is also required. Management decisions must be driven by long-term sustainability and not short-term profitability or demand." Mr. Mittal concluded by saying that delivering on these fundamentals will lead to the creation of a more attractive industry. "The basic fundamentals are in place to create a sustainable business model," he said. "If we can deliver, we have the opportunity to change the image of our industry to that of a growth industry, managed for value by a set of truly world-class blue chip companies, adding value to our customers and creating wealth for our shareholders and the communities in which we operate. I am confident that with the right approach and commitment this can be achieved." For further enquiries or to request a full copy of the speech, please contact: Paul Weigh, Corporate Communications Mittal Steel Company T: +44 20 7543 1172 About Mittal Steel Mittal Steel Company is the world's largest and most global steel company. The company has operations in fourteen countries, on four continents. Mittal Steel encompasses all aspects of modern steelmaking, to produce a comprehensive portfolio of both flat and long steel products to meet a wide range of customer needs. It serves all the major steel consuming sectors, including automotive, appliance, machinery and construction. For 2004, Mittal Steel had revenues of US$22.2 billion and steel shipments of 42.1 million tons. The company trades on the New York Stock Exchange and the Euronext Amsterdam under the ticker symbol "MT". DATASOURCE: Mittal Steel Company CONTACT: Nicola Davidson, +44 (0)20 7543 1162, or Paul Weigh, +44 (0)20 7543 1172, both of Mittal Steel Company Web site:

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