No Slide Title - DGINS 2019...5 Corus UK/Netherlands21.3 JFE 3 Japan 29.9 Baosteel China 22.5 Baosteel China 28.6 Posco South Korea42.86 6 LNM/Ispat 1 UK/Netherlands20.0 Baosteel China

1United States Steel Corporation

© 2019 U. S. Steel Košice

GLOBALIZATION

Alexander ZEMANCIK

AND THE STEEL INDUSTRY

2United States Steel Corporation© 2019 United States Steel Corporation

THINK PANGEA ;-)

GLOBALIZATIONMIGHT NOT BE A WHOLE NEW TREND


It is a process of interaction and integration among people, companies, and governments worldwide. It has grown due to advances in transportation and communication technology.

© 2019 United States Steel Corporation

WHAT IS

GLOBALIZATION

ECONOMICCULTURAL

POLITICALENVIRONMENTALT

Y P

E S


WHY IS GLOBALIZATION

GOOD / BAD

ADVANTAGES


1. Incentive for countries to specialze and benefit from the application of the principle of comparative advantage.

2. Access to larger markets, which leads toa reduction in average production costs.

3. Worldwide access to sources of cheaperraw materials (global sourcing).

4. Avoidance of regulation by locating productionin countries with less strict regulatory regimes.

5. Increased flows of inward investment between countries,which has created benefits súch as sharing of knowledgeand technology.

6. In the long term, increased trade is likely to lead to the creation of more employment in all countries that are involved.

DISADVANTAGES

1. The over-standardization of products through global branding.

2. Large multinational companies can also suffer from diseconomies of scale, such as difficulties associated with coordinating the activities of subsidiaries based in several countries.

3. The increased power and influence of multinationals.

4. Potential loss of jobs in domestic markets caused by increased, and in some cases, unfair, free trade and structural unemployment.

5. Increased pace of deindustrialization, which is theslow erosion of an economy's manufacturing base.

6. Increased risk associated with theinterdependence of economies.

7. Increased pollution and helped contribute toCO2 emissions and global warming.


MULTINATIONAL CORPORATIONS


Just 10 companies control almost every large food & beverage brand in the world.


MULTINATIONAL CORPORATIONS


VW has become the leader in automotive.

Volkswagen was founded in 1937. Since then, the company has grown into a global corporation operating in approximately 150

countries and running 100 production facilities across 27 countries.


GLOBALIZATION IN

THE STEEL INDUSTRY

1970 20201980 1990 2000 2010

Since 1970s, the steel industry started to become privatised after long decades of being nationally regulated and nationalised.

30 years ago, Europe was theworld‘s largeststeel producer.

Since the mid-1990s a major process of concentration, prIvatisation and trans-nationalisation has turnedthe steel industry into a globalised sector.

Currently, the largest steel producersin the EU are multinationalcompanies:

ArcelorMittalTata Steel+ThyssenKruppRiva Group

GER

ITA


GLOBALIZATION IN

THE STEEL INDUSTRY

Improved quality of products, decrease ofthe cost of production and increase of productivity in order to compete in the world market and gain profits.

Accelerated knowledge exchange through technology and promotion

Global regulation is increasing carbon, environmental and safety control

Global capital more interchangeable and free flowing across borders

Continuous shifts in manufacturing competitiveness

Increasing global trade

Multi-speed regional growth

There are many factorsencouraging globalization:


Mittal


Arcelor was created through Arbed (Luxembourg), Arcelaria(Spain) and Usinor(France)

HQ in Luxembourg

Arcelor was the world´s largest steel producer in terms of turnover before takeover

Second largest in terms of steel output – 46.7 mil. tons in 2005

In 2015 Arcelor had revenues of $38.84 billion

Arcelor

Formed by the merger of: LNM Holding&Ispat and International Steel Group Inc.

HQ in Rotterdam, Netherlands

In 2015, Mittal had revenues of 28.1 billion

World‘s largest steel producer by volume– 63 mil. tons in 2005 + also the largestturnover


ArcelorMittal

The deal valued at $22.7 billion offerto Arcelor‘s shareholders.

The merger resulted in the creationof the world‘s largest steel companywith 117mil. ton crude steel capacity.


MittalArcelor

JAN 2006

NOV 2018

AM took over another importantsteelmaker Ilva (Riva Group) withcrude steel capacity of 4 mil. ton.Ilva has plants in Taranto, Genovaand Novi Ligure.

To avoid market dominance,AM had to sell its operations in Galati, Skopje, Piombino,Ostrava and Dudelange.Total steelmaking capacity of 4.8 mil. tons.


Tata Steel


Corus

Corus was formed in 1999 through the mergerof two companies British Steel and Hoogovens

HQ in London, Company had 4 divisions: Strip products, Long products, Aluminium and Distribution& Building System

Plants located in the UK, The Nederlands, Germany, France, Norway and Belgium

In 2005 revenue £10,142 million, Crude steelproduction 18.3 mil.tons in 2006 (9-th largeststeel producer

Tata Steel is a part of Tata Group, one of the largest diversified business conglomerates in India

In Ferbuary 2005 Tata steel acquiredNatSteel (Singapure) and Milenium Steel (Thailand)

Tata Steel generated net sales of Rs 175 billion (cca $4 billion) in the financial year2006-2007

Crude Steel Production 6.4 mil.tonsin 2006


Tata Steel

Tata acquired Corus on April 2nd, 2007

The deal price was $12.11 billion

The combined entity has become the 6th largest steel producer with crude steelproduction of 26.5 mil. tons in 2007


Corus

APR 2007

2020


Company Company Company Company Company

1 Posco South Korea26.5 Mittal1 Steel Luxembourg/63.0 ArcelorMittal Luxembourg117.2 ArcelorMittal Luxembourg116.4 ArcelorMittal6 Luxembourg96.42

2 Nippon Steel Japan 25.2 Arcelor2 France/Spain46.7 Nippon Steel Japan 32.7 Nippon Steel Japan 35.7 China Baowu Group China 67.43

3 Arbed Luxembourg22.2 Nippon Steel Japan 32.0 JFE Japan 32.0 JFE Japan 34.0 Nippon Steel Japan 49.22

4 Usinor France 22.2 Posco South Korea30.5 Posco South Korea30.1 Posco South Korea31.1 HBIS Group5 China 46.8

5 Corus UK/Netherlands21.3 JFE3 Japan 29.9 Baosteel China 22.5 Baosteel China 28.6 Posco South Korea42.86

6 LNM/Ispat1 UK/Netherlands20.0 Baosteel China 22.7 US Steel USA 21.2 Tata Steel4 UK/Netherlands/India26.5 Shagang Group China 40.66

7 Baoshan China 16.7 US Steel USA 19.3 Nucor USA 20.3 Anshan-Benxi 23.6 Ansteel Group China 37.36

8 ThyssenKrupp Germany 16.1 Nucor USA 18.4 Tangshan China 19.1 Jiangsu Shagang 22.9 JFE Steel Japan 29.15

9 Riva Italy 14.1 Corus Group UK/Netherlands18.2 Corus Group UK/Netherlands18.3 Tangshan 22.8 Jianlong Group China 27.88

10 NKK Japan 12.8 Riva Italy 17.5 Riva Italy 18.2 US Steel 21.5 Shougang Group China 27.34

Notes:1 LNM/Ispat, and lattely Mittal Steel has its headquarters in the UK and the Netherlands

2 Formed in 2002 through the merger of Arbed, Aceralia and Usinor

3 Previously NKK and Kawasaki

4 Includes Corus

5 Includes tonnage of Serbia Iron & Steel d.o.o. Beograd and MAKSTIL A.D. in Macedonia

6 Liberty finalised the acquisition of 7 steelworks and 5 service centres from ArcelotMittal on July 1, 2019 with a combined rolling capacity of over 10 million t.

20181999 2005 2006 2007


SCENARIO 1:

ONE UNITED COMPANY


COMPANY A

A1 A2 A3 A4

STAT OFFICE

X1

X1


COMPANY A

A1 A2 A3

STAT OFFICE

XA

SCENARIO 2:

TWO INDIVIDUAL COMPANIES

COMPANY Ax

AX

XAX

XA + XAx > X1


© 2019 U. S. Steel Košice

THANK YOUAlexander ZEMANCIK

Documents

No Slide Title - DGINS 2019...5 Corus UK/Netherlands21.3 JFE 3 Japan 29.9 Baosteel China 22.5 Baosteel China 28.6 Posco South Korea42.86 6 LNM/Ispat 1 UK/Netherlands20.0 Baosteel China