ArcelorMittal Poland CEO Sanjay Samaddar sees strong natural advantages for steel production in Poland Courtesy of ArcelorMittal Poland

E Blake Berry: You’ve been doing business here for five years now. How has the experience treated you?

Sanjay Samaddar: If I were to summarize the five-year story of ArcelorMittal in Poland, I would say it’s one of the most significant modernization programs the steel business has seen in the last five-year framework of the business, possibly for any location globally. We have invested more than $1.2 billion dollars – that’s more than zł.3.8 billion – which is a very significant investment in one destination, even for a company of our size.

What we have achieved as a consequence is the ability to literally change the face of Polish steel, so to speak.

Why Poland?

Poland has natural advantages for steel production – a strong base of coal-mining and coke-making assets – crucial ingredients for any steel business – a skilled and competitive labor environment, cooperative trade unions which have an eye to the future, and excellent geographic positioning in the hub of Central Europe. And of course there’s a strong captive market for steel in Poland and in the natural market zone of the Czech Republic, Slovakia and Hungary.

We clearly see Poland as a hub of our Central European operations. In our industrial footprint, Poland will continue to play that role. It contributes – if I’m not mistaken – 30-35 percent of the region’s GDP. It’s a country with a population of nearly 40 million, so it has a strong, consumption-driven economy, compared to many other countries whose economies are export driven.

Poland still has fairly ambitious plans in terms of its road and railway networks. We also see good potential in the growth of the automotive and appliance businesses. These are all steel-consuming sectors. And Poland, unlike many of our other operations in different parts of the world, is a single location where we produce a remarkable portfolio of excellent products.

When you see all these dimensions of the business supported by strong local demand, it becomes a very interesting place to be.

ArcelorMittal entered Poland through the privatization of Polskie Huty Stali. What lessons could today’s investors draw from your experience?

In our view, any strategic investor has to come with a long-term vision and mission. Along with this, there has to be a genuine interest in growing with the Polish economy.

There should also be a strong belief in social dialogue, because without that you cannot move the transformation forward. Social dialogue assures a mutual recognition of the difficulties and challenges on both sides. And there must be a strong human dimension in dealing with change, such as creating separation packages which are fair and beneficial to employees, and continuous investment in health and safety, training and development.
And you need a strong faith in the local culture and local management skills, which are available in plenty.

The Polish Steel Association has cited “runaway electricity prices” as an issue affecting the steel production market. Would you agree with this?

Source: The Polish Steel Association

What other obstacles are there to doing business?

The only disadvantage which I can readily think of is in logistics, particularly for exporting steel. We are not a coastal plant, so it costs quite a bit – E20-30 per tonne of steel – to move our product to the nearest port. If future growth is going to be coming more from Asian regions, then, yes, to that extent Poland is a little bit disadvantaged.

What sustainable solutions have you brought to the market?

Firstly, look at the newly commissioned equipment we have installed – these are some of the most energy efficient assets being used in the entire steel industry. I’ll give you an example: we have a state-of-the-art hot-rolling mill in Kraków. This is the most energy-efficient hot rolling mill in Europe, if not worldwide. Why? The old hot-rolling mill had six furnaces, while the new mill produces more than the old one, with only one furnace. This shows how the technology itself is contributing dramatic, continuous improvements in terms of environment awareness.

Apart from that, we’ve made extensive investments in several environmental projects in order to fall in line with the new integrated permits, which are constantly focusing on tighter emission norms. And part of our five-year modernization program has been to have sufficient funds allocated to environmental projects in areas like coke-oven gas cleaning, by-products management and other areas.

We not only fully compliant with the regulations, but in several areas we are trying to define best-practice.