ArcelorMittal, the world’s largest integrated steel and mining company, gave a broad hint last year that it could be whittling down operations in Trinidad and Tobago.
The multinational shut down two plants in the United States – at LaPlace, Tennessee, and at Vinton, Texas – as part of its “stated strategy of selective divestment of non-core assets.”
The move took place in a difficult financial year, one in which the conglomerate endured a net loss of US $7.9 billion; the previous year’s losses amounted to US $1.1 b.
ArcelorMittal was continuing to suffer from the sharp slump in international steel prices, by about half, partly because of over-supply by China.
The company decided on a few far-reaching and urgent measures to generate cash flows, including a share rights issue and reduction of capital expenditure.
And to shut down plants and to restructure around the world!
In this part of the world, the plan was “asset optimisation”, a sort of buzz term for removal of non-performing assets.
Chairman and CEO Lakshmi Mittal unveiled a strategic plan to turn around the company, with “specific targets for each business segments.”
Clearly, some focus was going to be placed on the Point Lisas plant, which produced direct reduced iron (DRI), billets and wire rods.
Arcelor Mittal has 19 international plants and footprints in 60 countries.
The Trinidad and Tobago operations, purchased in 1989, was one of the first acquisitions of the merged ArcelorMittal, which was launched in 1976.
In the Caribbean-Latin American region, the conglomerate also operates out of Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Peru and nearby Venezuela.
Brazil has extensive mining and steel operations and more than 30,000 workers.
The corporation engaged professionals, both from inside the group and outside, to undertake an exhaustive and clinical study on the best business way forward, in light of all challenges.
A sustainability report and roadmap was undertaken for each country of operation.
The Point Lisas management sought meetings with the Keith Rowley administration to explain the financial dilemma and possibly seek support, such as renegotiated natural gas prices.
But ministers were too busy to meet officials of one of the world’s major and most influential industrial corporations.
Workers did not appreciate the financial bugbears, and kept pressing for pay hikes.
When the Industrial Court ruled for the workers, international executives felt this country did not appreciate the company’s financial turmoil.
A recommendation was made – and accepted – that the Point Lisas plant be mothballed and that operations be shifted to Latin American operations.
Even with the closure of the local mill, the government continued to see the issue as just the displacement of just under 700 workers.
There is much more at stake for Trinidad and Tobago, which enjoys the highest per capita direct foreign investment in the western world.
But the Rowley administration has not seen the depth of the issue.
WHAT T&T LOSES…
With the closure of the ArcelorMittal plant, Trinidad and Tobago will lose foreign exchange earnings and savings.
This country will also company’s surrender the gross domestic product (GDP) contribution, natural gas and electricity sales and port operations charges.
There are also implications for suppliers, local customers, the structure of the manufacturing sector and morale and mood of workers in the energy sector.
Also, local downstream steel plants could face product supply issues.
There are questions of whether the plant will become rusted iron.
Possibly most importantly is whether the plant shutdown could negative impact future direct foreign investments or shake up current multinationals operating in Trinidad and Tobago.
Through all of this, the government continues to see the issue as purely one of the loss of worker jobs.