The Rotterdam-based Ispat International has announced that the alliance will complement mutual efforts on marketing, production and distribution of flat-rolled steel products manufactured for the automotive, appliance and motor lamination industries throughout the Americas excluding Brazil, where IMSA ACERO would like to maintain its market position.

An Ispat spokeswoman said as a result of the alliance, Mittal's US-based Ispat Inland and IMSA ACERO will benefit from the complementary marketing networks, shared production knowhow, improved production efficiencies, lower distribution costs and strong customer relationships.

Under the agreement, Ispat's Mexican steel-making operation IMEXSA will supply 75 per cent of IMSA ACERO's slab requirements over the nextfive years, which may be renewed for future periods. This transaction guarantees a significant part of IMEXSA's sales, besides assuring IMSA ACERO the supply of slabs.

The reasoning is that the proximity of IMEXSA's facilities to IMSA ACEROs hot strip mill would enable shorter lead times, quicker deliveries and efficient logistics. The two sides have also agreed to develop a shared online order management system, aimed at further reducing total costs for both. IMEXSA produces slabs while IMSA ACERO is one of the world's largest buyers of slabs. The latter 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 flat products.

As part of the agreement, both are considering the construction of a new, high-capacity galvanising facility for steel products for the automotive industry in Mexico and are currently conducting a joint feasibility study.

The proposed facility would produce wide coilssuitable for manufacturing exposed parts by the automotive industry for which there is no installed capacity in Mexico. According to Ispat sources here, the automotive industry in Mexico currently imports most of its steel needs. The proposed facility would reinforce the market positions of both producers by meeting the current and future requirements. Mittal, who is the chairman and CEO of Ispat International, spoke of the 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, he added. He felt the alliance would lead to lower costs and new market opportunities for both companies.

Analysts say the alliance was forged to penetrate the automotive market, a lucrative one which Mittal has long eyed. Santiago Clariond Reyes, president and CEO of IMSA ACERO, sounded upbeat and said "having guaranteed an attractive slab source for the futureassures us a competitive position in the steel market".

Although he reigned for some years as the world's richest Indian, Mittal was ousted recently from that position by the London-based Hinduja family.

Mittal's LNM group controls a wide network of companies in a number of countries. Ispat International NV claims to be the world's fastest growing steel company, with 10.8 million tonnes of shipments to over 55 countries in 1998, posting a more than seven-fold increase over 1992 when it shipped 1.5 million tonnes.

The company's 1998 lobal net sales increased to $3.5 billion, up from $2.2 billion in 1997. Sources here say the company has grown to become the world's eighth largest steel producer while the LNM group has emerged the world's fourth largest steel producer. Ispat International is, however, the world's largest producer of steel using the integrated mini-mill process.

Analysts monitoring Mittal's strategy say he sources low-cost raw materials from sites that are located close todeep-water port facilities. His corporate philosophy, they say, is to focus on both integrated mini-mill and blast furnace processes for steel making. Ispat International's shares are quoted on the New York and Amsterdam Stock exchanges.