IMSA ACERO Announces Strategic Alliance with ISPAT
10 May 1999
IMSA ACERO Announces Strategic Alliance with ISPAT and Assures Supply of 75% of its Slab Requirements
MONTERREY, Mexico, May 7 -- GRUPO IMSA's (IMSA)
steel processing segment, IMSA ACERO, announced today that it has
executed an agreement with ISPAT INLAND, INC. ("ISPAT") and ISPAT MEXICANA,
S.A. de C.V. ("IMEXSA"), for the marketing, production and distribution of
each other's hot rolled, cold rolled and coated products in the automotive,
appliance and motor lamination markets, throughout the Americas, except
Brazil. This alliance will take advantage of both companies' complementary
marketing networks, production know-how, strong customer relationships and
facility locations, thereby increasing and improving their production capacity
and efficiencies, and creating substantial synergies in the commercialization,
production and distribution of flat products.
As part of this agreement, IMEXSA will supply IMSA ACERO with 75% of its
slab requirements during the next five years, term which may be renewed for
future periods. This transaction guarantees an important portion of IMEXSA's
sales, and assures IMSA ACERO the supply of high quality steel. IMSA ACERO
has plans to further expand the capacity of its hot strip mill and cold rolled
facilities located in Monterrey, Mexico to support the growing demand for high
quality value added flat products. The proximity of IMEXSA and IMSA ACERO's
hot strip mill enables efficient logistics, short lead-times, quick deliveries
and low inventory using direct rail connection between the two mills. The
parties will further develop a shared on-line order management system to
further reduce total costs for both companies.
In addition to this alliance, IMSA ACERO and ISPAT INTERNATIONAL N.V. are
planning to start the construction of a new high capacity galvanizing facility
for producing steel products for the automotive industry in Mexico. This new
plant will be built, owned and operated jointly by both producers, subject to
the findings of a feasibility study currently conducted by both parties. This
facility will produce wide coils required for exposed parts in the automotive
industry, of which there is no installed capacity in Mexico. Currently, the
automotive industry in Mexico imports most of its steel product needs. This
facility would reinforce the market positions of both producers by complying
with the current and future market requirements.
"This alliance gives us the opportunity to penetrate into the automotive
market, providing us with a new potential line of business, in which we are
determined to play an important role by taking advantage of ISPAT's technology
and vast experience in the market, and using IMSA ACERO's extensive and
efficient distribution network," said Santiago Clariond Reyes, President and
CEO of IMSA ACERO. "Having guaranteed an attractive slab source for the
future, assures us a competitive position in the steel market," Mr. Clariond
added.
Lakshmi N. Mittal, ISPAT INTERNATIONAL N.V.'s Chairman and Chief
Executive Officer, said, "We have had a long and successful relationship with
IMSA ACERO based on slab supply over the past years. With the addition of
ISPAT INLAND in the US in 1998, the synergy between ISPAT MEXICANA, IMSA ACERO
and ISPAT INLAND was compelling. This alliance will lead to lower costs and
new market opportunities for both of our companies."
IMEXSA is a wholly owned subsidiary of ISPAT INTERNATIONAL N.V.
. It is one of only two major slab producers in the
world dedicated to the manufacture and sale of slabs solely to outside
customers and the only producer using the continuous casting process for its
entire manufacturing process. IMEXSA uses Direct Reduced Iron as its primary
metallic input for substantially all of its production. The company has
advanced secondary metallurgical capabilities, including vacuum degassing and
calcium silicon injection, which enables it to produce higher-quality slabs
for specialized applications in the automotive, line pipe manufacturing, ship
building and appliance industries. In 1998, approximately 71% of IMEXSA's
sales were exported to the US, Canada, Europe and the Far East and 23% to
Mexico, making it the country's largest steel exporter.
Ispat Inland Inc., the 6th largest steel producer in the US is a wholly
owned subsidiary of ISPAT INTERNATIONAL N.V. The company is a leading producer
and supplier of high quality hot rolled, cold rolled and coated flat products
for the automotive and appliance industries from its facilities in East
Chicago, Indiana and its joint venture facilities in New Carlisle, Indiana.
Ispat International N.V. is the only truly global steel producer in the
world. The company is one of the lowest cost steel producers and the largest
producer and consumer of Direct Reduced Iron in the world. It has over 15,000
employees and manufactures a broad range of semi-finished and finished steel
products at its steelmaking operations in the US, Mexico, Trinidad, Canada,
Germany and Ireland. Ispat International has increased its steelmaking
capacity by acquisition and internal investment, and as a result shipments
have increased from approximately 1.5 million tons in 1992 to 10.8 million
tons in 1998. The Company's net sales totaled US$3.5 billion in 1998. ISPAT
INTERNATIONAL is a member of The LNM Group, the world's 4th largest steel
producer, which has privately owned steelmaking operations in Kazakhstan
(Ispat Karmet) and Indonesia (Ispat Indo).
IMSA ACERO is the largest producer of galvanized, galvalume and prepainted
steel and a leading player in the non-coated steel market in Latin America,
with a strong focus on value added products and an increasing international
presence. IMSA ACERO has become widely recognized for its pioneering
achievements in the coated and non-coated steel industry.
GRUPO IMSA, established in 1936, is a leading Mexican diversified
industrial company, which conducts business in three segments: steel
processing products; batteries and autoparts; and construction and related
products. The Company exported to over 30 countries in 1998 and has
manufacturing and distribution operations in Mexico, the United States,
Central and South America. In 1998, its revenues reached US$1.5 billion, of
which 40% were generated outside Mexico. Grupo IMSA is a publicly traded
company on the Mexican Stock Exchange (IMSA) and the New York Stock Exchange
(IMY).