Emerging economy firms buying up Western steelmakers

MOSCOW – Steel producers from India, Brazil and Russia are investing in industrialised countries, highlighting the rising power of emerging economies in a new phase of globalisation, analysts said this week.

“Russia, Brazil and India are buying industrial assets in rich countries at a time when industrial countries are leaving manufacturing,” Charles Robertson from ING Bank in London told AFP. In the West, Robertson said, manufacturing is not considered a “value-added activity” and firms “are moving towards service economy,” giving companies from emerging economies the edge.Kamal Nath, India’s Commerce and Industry Minister, agreed.”The winds of investment flows and trade flows are changing, and this means greater integration of the global economy,” Nath said in an interview with the International Herald Tribune published on Tuesday.On Monday, Russian steel producer Evraz announced it was buying its US competitor Oregon Steel for US$2,3 billion as a base for expansion into the US market.The deal would place Evraz in the world’s top 10 steel producers and make it Russia’s number one.But the Russian firm’s ambitions are by no means an exception among metals giants in emerging economies.Brazil’s Companhia Siderurgica Nacional (CSN) is currently vying with India’s Tata Steel over the British steel company Corus.The Brazilian company, which last month merged with US-based WPC, has pledged 7,8 billion euros for Corus.The acquisition would make CSN the world’s fifth largest steel producer.Meanwhile, the Russian daily Kommersant reported earlier that Severstal, Russia’s second biggest steelmaker, could aspire to buying up US Steel while also merging with Russian mining companies Gazmetall and Metalloinvest.”Evraz’s bid (…) marks the start of a likely busy period of consolidation and international acquisitions by Russia’s major metal producers,” said Christopher Weafer, analyst at Alfa Bank in Moscow.”A very important factor will be how local industry regulators in the US and EU view these and other proposed acquisitions,” Weafer said.Robertson explained that a major factor in the rising power of steelmakers from emerging markets has been a rise in commodity prices in recent years.Nampa-AFPIn the West, Robertson said, manufacturing is not considered a “value-added activity” and firms “are moving towards service economy,” giving companies from emerging economies the edge.Kamal Nath, India’s Commerce and Industry Minister, agreed.”The winds of investment flows and trade flows are changing, and this means greater integration of the global economy,” Nath said in an interview with the International Herald Tribune published on Tuesday.On Monday, Russian steel producer Evraz announced it was buying its US competitor Oregon Steel for US$2,3 billion as a base for expansion into the US market.The deal would place Evraz in the world’s top 10 steel producers and make it Russia’s number one.But the Russian firm’s ambitions are by no means an exception among metals giants in emerging economies.Brazil’s Companhia Siderurgica Nacional (CSN) is currently vying with India’s Tata Steel over the British steel company Corus.The Brazilian company, which last month merged with US-based WPC, has pledged 7,8 billion euros for Corus.The acquisition would make CSN the world’s fifth largest steel producer.Meanwhile, the Russian daily Kommersant reported earlier that Severstal, Russia’s second biggest steelmaker, could aspire to buying up US Steel while also merging with Russian mining companies Gazmetall and Metalloinvest.”Evraz’s bid (…) marks the start of a likely busy period of consolidation and international acquisitions by Russia’s major metal producers,” said Christopher Weafer, analyst at Alfa Bank in Moscow.”A very important factor will be how local industry regulators in the US and EU view these and other proposed acquisitions,” Weafer said.Robertson explained that a major factor in the rising power of steelmakers from emerging markets has been a rise in commodity prices in recent years.Nampa-AFP