Charles Caratini / REUTERS
He’s Indian by upbringing and he’s not a banker by trade. Not your typical fat cat, then. Well, he does reside in London and is a director of Goldman Sachs, the biggest Wall Street beast. But his enormous if wildly fluctuating personal fortune – $29 billion at the last count (up from $19 billion in 2009, but down from $35 billion in 2008) – comes largely from something as quaint as steel. Mittal’s extraordinary career shows how fat cats can prosper equally well from the more mundane operations of corporate globalization.
Legend has it that in 1952 Mittal began his life sleeping on rope furniture, a ‘son of the desert’ in Rajastan. His father moved to Kolkata and made enough money as a partner in a steel firm to send Lakshmi – named after the Hindu goddess of wealth – to the prestigious St Xavier’s College, where he was good at accounts. He then worked for his father who, in 1976, bought a failing steel mill in Indonesia and sent Lakshmi to turn it around. This he duly did, before moving on in 1989 to do the same in Trinidad, then Mexico, and finally – after numerous disputes – taking complete control of the family’s international arm.
In Mexico the government had invested $2.2 billion to make pipes for the oil industry with state-of-the-art facilities at its ‘Pacific Pittsburgh’ Sicartsa plant. The price of oil then tanked, and with it the Mexican economy – Wall Street creditors insisted on the plant being sold off. Mittal offered $220 million, of which just $25 million came from him, the rest from government bonds. He promptly crated up the new mill and sold it to South Korea, then tripled production from the old plant, employing impoverished fisherfolk and peasant farmers.
This became Mittal’s trademark – ‘consolidating’ world steel production by snapping up privatized steel works in ‘emerging’ economies where labour was cheap and governments anxious to please. A bold move, which coincided with his relocation to London in 1995, was the acquisition of the giant, filthy Temirtau steel works in Kazakhstan. Built by forced labour under Stalin, it employed some 83,000 workers, who had not been paid for six months. Mittal received $450 million from the European Bank for Reconstruction and Development and the International Finance Corporation, then dismissed a third of the workforce. For those who remained, conditions got worse. Gas explosions in the company’s coal mines in 2004 and 2006 killed 51 people. ‘The danger is so high that when I go to work I often feel I’m on a suicide mission,’ said one worker. ‘It’s so tough here that many are leaving to work in mines in Siberia.’
By 2005, when it acquired the International Steel Group in the US, Mittal Steel had become the largest steelmaker in the world. The following year it took over the next biggest, Arcelor, based in Luxembourg. The new company, ArcelorMittal, produces three times as much steel as its nearest rival – Nippon Steel in Japan – and a tenth of the world’s output. Mittal holds a controlling 43 per cent stake.
He is not reluctant to be conspicuous. He is said to own three palaces in Kensington Palace Gardens, London, together valued at a reputed $500 million. The largest, known as ‘Taj Mittal’ and thought to be the most expensive house in the world when he bought it in 2003, contains stone from the same quarry as the Taj Mahal and a bejewelled swimming pool. He spent $100 million on his daughter’s wedding in France. Among his personal possessions is a colossal bus fitted out to 5-star hotel standards, with a retractable Mercedes car in its undercarriage. He takes his philanthropic duties seriously, donating $10 million to nine Indian athletes in an attempt to win India’s first Olympic gold medal, which one of them duly did (for shooting) in 2008.
But he does, naturally enough, avoid paying tax, courtesy of Dutch tax havens. As recession struck the steel industry in 2008, he also avoided losing any more than $17 billion of his personal wealth by sacking 40,000 of his worldwide workforce. Such anguish as he feels from emitting 68 million tons of carbon dioxide every year from his European steel plants alone must surely be relieved by the annual 90 million tons-worth of permits he has received from the European emissions trading scheme, leaving him with surplus ‘credits’ valued at $1 billion. Among the many plaudits he has received, perhaps the most prized might be the 1998 Willy Korf Steel Vision Award.