Turkey, which obtained $12 billion from various privatizations this year, is to hold a tender for another important privatization.

World steel market’s giants are awaiting the tender for the sale of 51 percent stake in Turkey’s biggest steel producer Erdemir. Among the 13 pre-qualified bidders, the world’s biggest steel producer Mittal stands out with a production capacity of 70 million tons. Mittal Steel executive board member and International Steel Group’s (ISG) founder and Chairman Wilbur L. Ross notes their interest in Erdemir, has to do with their European Union (EU) strategy. According to Ross, the state owned Erdemir can only stand strong by becoming a global player. “The steel industry’s dynamics continually change and greater changes will be seen. The sector is in a consolidation period. Lately the size of the biggest ten doubled. Perhaps eventually three big firms will remain.” Ross noting Mittal despite its leading position produces only six percent of the world’s total steel output characterizes the consolidation process, during which the small will be eliminated and only the big will stand, as inevitable. “The companies that accept consolidation will have the chance of obtaining more competitive advantages and reaching a more stable and sustainable future. The key is to find the right partner.”

Ross indicates they have all the competence required to purchase Erdemir. According to Ross their strong composition and their past experience in privatizations, they have completed in 15 privatizations so far, would be to their advantage. Ross also touched upon the public reaction against foreign bidders. “Fear in the face of the unknown is the greatest fear, particularly for the employees. We understand this reaction.” Ross reassures that Mittal will keep all its commitments concerning the executive board, the employees and the local people. Ross recalls their conduct in their previous privatization experiences. Mittal does not effect an executive board change in the firms it takes over. No large scale employee reductions are in question. Ross relates that Mittal provides assistance in technology and infrastructure to the companies it acquires and enhances their raw material and market means by using its global advantages. Ross notes in the case that they acquire Erdemir they will have realized an important achievement with regard to the European market where they are the second largest steel producer. “Erdemir will be our crown’s most precious gem. Production will primarily be domestic market directed. However even if the domestic demand drops that does not imply that we will reduce Erdemir’s production. We may even raise the production and aim at exportation under such circumstances.”

Ross indicated that the ISG had an extremely strong structure during his presidency before it was turned over to Mittal Steel. The ISG, established in 2002 and endorsed nine billion dollars in 2004 has 13 production facilities in eight US states. The ISG was one of the biggest producers in America with a capacity of 23 million-ton raw steel production and 15,000 employees. Ross notes they believed that being part of a global joint group was the only way to become more powerful in the future and that’s why they joined Mittal.

“Global companies have a series of important advantages and better serve the demands of a global customer portfolio,” Ross continued. He said despite the ISG’s leadership in the US, it would have been difficult for it to form such a portfolio alone, if it had not joined with Mittal.

“Mittal Steel presented the biggest potential and allowed the ISG to preserve its prided heritage and culture. The ISG’s position in the market and opportunities in the long run will progress significantly, “Ross explained.

Mittal Steel’s senior official Ross said they had good relations with their employees and trade unions and asked that Erdemir employees not worry about this. According to Ross, it is understandable that employers and employees can be sensitive during the sale process. Citing two steel companies in South Africa and Romania purchased by Mittal Steel, Ross said the number of employees, the wages and production increased in these companies and they have been opened to the world. The same thing will happen in Erdemir as well, Ross continued.

“When our employees are satisfied, we believe we will be successful. Our prominence derives from the importance we give our employees,” he said.

Ross notes they prefer to work with local managers and added they trained them to increase their knowledge and skills. He emphasized they will make Erdemir a multinational company in cooperation with the Turkish government, as well as Erdemir’s employees and managers.

Mittal, the world’s number one steel producer earned $22 billion from the sale of 42.1 million tons of steel products in 2004. The company producing steel in 14 countries has a total of 179,000 employees. The company’s products are used in several sectors from home products to automobiles.