Lakshmi Mittal: King of steel

23:25Like we need an insight into psychology. Now, he rarely reviews much about himself beyond the details of his business, but he did give Code Steel author Tim Bouquet an insight into his thinking. This is a really interesting quote. He said, I once took up golf, started playing it every day. Then one day I was driving to the golf club and it worried me that I was becoming addicted, losing my focus, which I don't like to do. So I turned the car around and came home. I have never picked up a club since. I mean, that is quite the extreme move. You know, a guy can have hobbies, Lakshmi. But you know, those who worked with him have described him as not used to taking no for an answer and being driven, determined and unsentimental.

24:03I think that is a trait of nearly all of our billionaires. You don't get many of our billionaires on this series who are basically soft hearted and prepared to see both sides of an argument. They tend to be pretty hard-nosed and decisive. In 1997, Mittal floated or sold around 20 % of ISPAT International on the New York and Amsterdam stock exchanges. You sell their shares, you raise more money for global expansion. Now, the people who look into these researchers, analysts were excited about ISPAT International, with one, Jeremy Fletcher from Credit Suisse First Boston, big investment bank, as was, saying it was arguably the best steel company on the planet.

24:44The company had a value of roughly$3 billion and its IPO, its share sale, was one of the largest in the steel industry in 30 years. And that was the year those IPOs give you a snapshot of what something's worth at any given time. They have to because people have got to buy the shares. That year, Forbes estimated Lakshmi Metall's wealth to be$1.9 billion. He's made it. Steel billionaires were few and far between at the time. One analyst said making 1.5 billion in steel is like making 50 billion on the internet. And although he kept a low profile, you know, maybe he listened to what his father told him, Mittal's ambition was never in doubt.

25:21When he was told his company was the seventh largest in the world in 1998, he quickly answered, and why not the largest in 10 years? That is some achievement to make that kind of money in the steel industry. The reason he was able to buy up a lot of these plants is because it was in secular long-term decline so actually making a profit in this business which is in decline i think is pretty pretty remarkable

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28:57So let's take him beyond a billion. In 2002, he found himself in the news when he admitted to paying£125 ,000 to the Labour Party just before the UK's 2001 general election. I remember this. Just weeks after Mittal's donation, Prime Minister Tony Blair wrote a letter to the Romanian government supporting Mittal's bid to acquire the state-owned steel plant Cydex. It was, at the time, Romania's second largest employer, and the plant accounted for nearly 6 % of the country's GDP. So this acquisition was a big deal. He ended up buying it for 50 million, but many Romanian opposition politicians were outraged, saying that the value was up to five times more.

29:37This was a really big scandal at the time. The thing that really made the newspapers is because this whole episode sparked what was called the cash for favours round in Britain. Tony Blair, Prime Minister at the time, argued he was helping a British company. Then journalists pointed out that Mittal's holding company for his business was registered in the Dutch Antilles, which is in the Caribbean, employed less than 1 % of its staff in the UK company. And the head of a British steel company said Blair's lack of due diligence on Mittal's company was a deliberate slight on the UK steel sector. so bad feeling all round.

30:09Mittal and Blair denied all allegations of any connection between the donation and the letter. Mittal would go on to donate to the Labour Party again. £2 million in 2005 and again in 2007. 2004 was an expensive year for Mittal. In April, he paid£70 million for a new home for his family, Kensington Palace Gardens, known as Billionaire's Row. So, you know, he stepped up from Millionaire's Row up to Billionaire's Row. I used to walk my dog right past all of these things because there's a whole bunch of them all in a row, which you can see from Kensington Gardens. And yeah, they are massive, you know, huge, opulent things.

30:44They have their own security guard. You can't just drive in up the front, but you can see it from the park. Yeah, you can just about walk your dog past them. Yes, exactly. I always imagine the billionaires are out there with their binoculars looking at the plebs. Looking at the little people walking their golden retrievers. So interestingly, this mansion was actually owned by another billionaire, Bernie Eccleston. We've done him. Yeah. So the 12-bedroom home had Turkish baths, a ballroom, a swimming pool inlaid with precious stones and pillars made from marble from the same quarry as the Taj Mahal.

31:12I mean, talk about knowing how to spend that money. And then just months later, it was his daughter's wedding. So another big payout coming up. Yeah, a modest affair. Invitations were sent out in silver boxes to a thousand guests. Kylie Minogue performed with fireworks near the Eiffel Tower. And one of the celebrations over the six days took place at the Palace of Versailles. It reportedly cost at least$55 million. Mattel said at the time, all these figures are speculation. Any father would want to give his daughter a very special day. And who can argue with that? But the Guinness Book of Records claimed it was the most expensive in the world at the time.

31:47I mean, this was an interesting one, though, because I think that this was the first ever private gig that Kylie Minogue ever did. Now the private pop star concert is a huge industry. And this was also the first time Versailles had ever been hired for a private event, because obviously it is a national monument for the French people. Yeah, well, this is Lifestyles of the Rich and Famous, isn't it? But by 2005, the steel industry was still fragmented, but two companies were pulling ahead. Yes. So one was Metal Steel, and the other was a company called Arcelor, which was the world's most profitable steel company.

32:20And that was a combination of three former state-owned steel plants in France, Spain and Luxembourg, which were helmed by a Frenchman called Guy Dolly. Yes, Arcelor's leadership had long feared a takeover attempt from the thrusting and ambitious Mittal. They even prepared a secret defensive strategy codenamed Project Tiger in which Lakshmi Mittal was referred to as Mr Moon and his son Aditya as Adam. What secret codename would you like to have? Thor. I'll be Odin then, Thor in Odin. The aim of Project Tiger was an interesting one. It was to buy up strategically important steel companies, expand global reach, boost share value, thereby making itself too expensive to afford to acquire.

33:05In January 2006, though, Mattel launched his hostile takeover bid for Arcelor with an opening bid of£12.7 billion. So about, in today's money, about$16 billion. Soon after that opening bid, Dolly, who was the chief of Arcelor, was interviewed on radio in France. Now, he was quoted saying Mittal Steel was a company full of Indians offering Monet de Sange, a French term for worthless currency. The phrase literally translates as monkey money, which carried a racial overtone that didn't go unnoticed. Mittal said at the time, they're all emotional comments. I know Guy Dole and he's a very nice gentleman.

33:43I respect him and I admire him, but later added, it was very sad. We are not used to these kinds of comments in today's age. Mittal faced fierce resistance from Arcelor's board and pushback from politicians across Europe. And to many, Mittal's takeover wasn't just a business deal. It was a threat of global finance coming in and stripping control from a cornerstone of the national economy. Yeah, and that is really interesting because there's lots of talk about steel is considered a strategic industry. And to lose control of it is considered one of those things you don't necessarily want to do. because in times of trouble, steel is obviously used in the defence industry a lot.

34:21Can you make your own tanks? Can you make your own planes? Can you make your own nuclear submarines? These are the questions that come up. So it's seen as a sovereign asset, which is why these kind of things become super sensitive. That's so interesting. So it's not even that steel is just a kind of emotional touch point for a lot of people whose families may have grown up working in steel mines and steel manufacturing. There's a bit of that. It's geopolitical. Geopolitical as well. Do you want to be a country which can't make its own steal? Even if it's losing money, it's something we want to hang on to because it has strategic value.

34:52Well, Mitov said there were reports of him sipping champagne while flying in for negotiation. So clearly there's a little bit of a PR move against him. Exactly. He said his team referred to these flights on his part as the pizza flight, because that's all they had time to eat while working long hours on the deal. So try to push back on this idea of him being this champagne-sipping billionaire coming in to wrest away a cornerstone of the national economy in France. But he was determined and he won. After six tense months of negotiations, Mittal's bid rose to nearly£18 billion, just over$20 billion, and was accepted.

35:27And then in 2007, the merged company, ArcelorMittal, biggest steel company in the world at that time, was born. After the merger, it became the first steel producer to manufacture over 100 million tonnes of steel annually. That is a lot. It was three times larger than its nearest competitor. It controlled about 10 % of the global market. And that same year, Lakshmi Mattel was ranked the fifth richest person in the world and the richest resident of Britain. 100 million tonnes of steel annually. Just for comparison's sake, the entire UK produces around 5 million tonnes of steel every year. But soon after the merger, there were some serious issues with one of the group's assets.

36:07In 2007, it was reported that 90 workers had died since 2004 while working in Mittal's coal mines in Kazakhstan. Amid some long-standing accusations of poor labour and safety standards, a spokesperson for Arslan Mittal said that$260 million had been invested in the mines and a further$63 million was planned. The company also pledged to install more methane detectors so you can tell what's going on underground. But then in October 2023, over 40 people died after a fire broke out at one of Arsalan Mittal's coal mines in Kazakhstan. The fire was thought to be caused by a methane blast, and the accident prompted the Kazakh president to ask Arsalan Mittal to leave the country.

36:47Aditya Mittal, that's Lakshmi's son, now the CEO of Arsalan Mittal, said in a statement, it's little consolation to say that the company expended considerable effort, further reinforced since 2020, in improving the safety performance of the operations in Kazakhstan. Now, by December 2023, the Kazakh government had bought out the Arslan Mito subsidiary at the cost of almost 300 million, which resulted in an$800 million hit. So basically, they were forced to sell it to the government. They're at a big loss of nearly a billion dollars. It is no consolation to say that mining and steelmaking is a dirty, dangerous business.

37:24But clearly, you can do a lot to mitigate those risks. Some will say they did not do enough. They would say that they have invested. to try and mitigate those problems. For many years, Arsalan Mittal was the biggest steel producer in the world, but they've seen a decline in output in recent years, driven by volatile markets, divestments like the Kazakhstan, when we just spoke about intensifying competition. As of 2024, it is now the world's second largest steel producer behind a company from guess where? I'm guessing China. You got it in one. It's worth saying in this point, since that merger of Arsla and Mattel, the share price initially went up very strongly.

38:07And that's when he was one of the richest people in the world and the richest person in Britain. But since then, some of these competition issues I've talked about, like particularly from China, the share price is down. In fact, it's lower than it was at the time of that actual tie up between Arsla and Mattel. So he's still very rich, but the steel industry has proved even harder to make a living in than it was on his rise. And it's something that all countries, companies are grappling with. There is simply an oversupply of mainly Chinese steel in the world looking for a home, which is undercutting prices around the world.

38:42But what's the latest on the man himself? Are there any personal updates from Lakshmi Mittal's personal life? Do you remember we talked about those non-dom, the people who live in the UK but don't pay tax in the UK on their overall earnings? That regime has had seen a crackdown from this government and the last actually. And there are rumours that he may move his tax residence out of the UK. Yeah, in May 2025, Bloomberg reported he's bought a$100 million home in Dubai. Which is where a lot of the non-doms who leave the UK go and set up shop. What we do now is we take our billionaires and we judge them on a bunch of categories.

39:20So the first category is wealth. You know, we look at this through a ton of different ways, like rags to riches, net worth. You know, the rags to riches idea is this idea of how far have they come. So Lakshmi Mattel, born into a family of entrepreneurs, started out in his family's business. He did have a kind of leg up, didn't he, by working in the family biz? Definitely working in a family business. And that was a family business that was well placed to capitalise on India's economic boom, which happened over these decades. So yeah, right place, right time, had a leg in. Nevertheless, did share a house of 20 family members in poor suburbs of both Kolkata and Rajasthan.

39:59So it's not as if he was born with a steel spoon in his mouth. No, definitely not. I mean, you know, net worth, he's kind of, at the time of recording, he's worth 21 billion. And, you know, he does like to spend the cash, you know, when he spends money, he breaks records, you know, house property, daughter's wedding. And bought one of the most expensive houses in London in history. For wealth, he's up there. He's not entry level. He was the richest person in Britain, fifth richest person in the world at one point. His fortune has suffered a bit because the steel industry has suffered, but I'm still going to give him a solid seven.

40:34Yeah, I think a seven out of ten. Although, actually, I'm going to bump him up to an eight out of ten because I do like it when he's billionaires. The spending, the wedding, the private concert with Kylie Minogue. I mean, that's billionaire stuff. Eight for you, seven for me. controversy. We talked about some of those safety issues, steel and mining are dirty and dangerous businesses. But as well as those Kazakhstan fatalities, a lab technician died in a fire in an Ispat plant in Ireland in 2001. An official said his life could have been saved if the company had spent£15 ,000 that had been recommended to be spent on improving safety.

41:07So that's quite a bad mark. Yeah, I mean, in response, Lakshmi actually said that he personally believed that safety rules might not have been followed. And that plant later on closed and went into liquidation five months later. Pollution from plants, of course. Steel is one of the most polluting industries in the world. The amount of energy that gets poured into this to heat it up to thousands of degrees centigrade. And both the carbon emissions and the fumes and stuff that come off it are a big problem. For example, there's one steel plant in the UK which for many years has been the single biggest carbon-emitting entity in the entire country.

41:41And you imagine all those steel plants all around the world. It is a dirty business. It is a big problem if you care about the environment. I mean, other than that, obviously, we've got that whole scandal over, you know, cash for favours, the political donations he made to Tony Blair, that letter that Tony Blair ended up writing to the Romanian government. He insists the donation and the letter were not connected. He's not a man who has avoided controversy in his time. No. It's one of those things, how much is connected to the industry and how much could you personally lay at his door? I'm going to say middle of the pack here.

42:12I'm going to give him a four. Oh, that's, yeah. Well, only because, you know, it's not like he's shafted his rivals. He's not an arms dealer. He's not a drug dealer. He did fall out with his own family. Yeah, that's their own business. Who hasn't fallen out with their dad and their brother at some point? Over billion dollar empires. I'm going to give it a four for controversy. I'll go a little bit higher to a five out of ten. Let's see if Lakshmi Mittal can redeem himself. we've got a category called giving back or philanthropy talking about how they've kind of contributed back to society. Some quite good efforts here.

42:47£15 million in 2012 to the Great Ormond Street famous children's hospital. But then he withdrew a pledge to make a$180 ,000 so$200 ,000 donation to the London School of Economics after his daughter was refused a place. A spokesman from Mattel said it was malicious gossip but the LSE stood firm. Interesting. Yeah. There was$25 million to Harvard for the Lakshmi Matalan Family South Asian Institute. And this, my favourite one, is actually he watched the Indian team win only one medal at the Olympics in 2004. So he spent nearly$10 million to support Indian athletes to train for the 2012 Olympics.

43:25And they won six medals in that. But the scheme closed in 2014. So if you want to win five Olympic medals, you have to spend about$9 million. Yeah,$9 million. So that is$1.5 million per medal. He's actually had a lot of donations to healthcare and research. He's given£3.5 million to Oxford University's vaccine research, sponsored a permanent professorship there. He gave£12 million to India's COVID response. So, you know, he's not ungenerous. He's not ungenerous. But these numbers, when you stack it up against, what is he worth now? $21 ,000 million,$21 billion. You know, he's no Bill Gates. and even people like Larry Ellison from Oracle.

44:07He's funding, you know, a billion here and a billion there for research institutes. I'm going to give him a... It's a nice smattering of philanthropy, this. So I'm going to give him a four. A nice sprinkling. Nice sprinkling. Well, I mean, we've come up increasingly against billionaires who don't even share any kind of details of their philanthropy. So I feel like the fact he is relatively transparent, unlike some of the other billionaires we're now covering, I will give him maybe a five out of ten. Okay. And then power and legacy. We opened this episode by saying that he had helped reform an entire industry.

44:39And that is true. He is a reflection, I think, rather than necessarily a cause of a globalized steel industry. It used to be kind of a sovereign thing that countries did on their own. He came in and bought up these old, decaying, sovereign capabilities and put them together into an international empire. And so that is a big deal and has reshaped the industry. He's also been instrumental in changing the technology away from these big blast furnaces to these small mini mills which use less energy. I think, always ask the question, would that have happened anyway? Maybe. But I think that Mittal is a giant in this industry.

45:15So I would give him a good seven, I would say, for power and legacy in this industry. Yeah, I have to say that until this episode, I didn't really think of steel as one of those industries that touched on so many different things in politics, in kind of the environment, in even, you know, countries, national identities and defence. You know, so I think I'm going to bump up my initial assessment of it. I think I'd give him a seven out of 10. Okay. So Lakshmi Mittal came from not so humble beginnings, but reshaped in industry, is reshaping some of the technology and made a lot of money in an industry where it is hard to make money.

45:53Most people lose a fortune in the steel industry. He made a fortune. Yes. And I think, you know, for what he's done to steel and for the fact that, you know, he still built one of the biggest steel companies in the world, he probably is a big contender in the billionaire stakes. Yeah. So, is he good, bad or just another billionaire? What do you think? Email goodbadbillionaire at bbc.com or drop us a text or WhatsApp to 001 917 686 1176. Tell us what you think. That's goodbadbillionaire at bbc.com or 001 917 686 1176. And also, don't forget to include your name because we may read out your message on a future episode.

46:38We've had some feedback in on our episode on shipping magnate John Fredrickson. One of his former employees has got in touch, someone who managed ships for Fredrickson. He describes his time working for him as a fascinating period and Fredrickson as a fascinating man. He says one thing about looking after his assets, not a dull moment and absolutely no certainty about what might happen tomorrow. You have to be on the tips of your toes, leaning forward. Not sure that's a good thing if you're captain of a ship, but there we go. congratulations your podcast is excellent says captain peter cooney and we say thank you very much well if you've ever worked for any of our billionaires and haven't signed an nda we would love to hear from you brant from san francisco bay area in california also got in touch to say i love the show i've always had an affinity with the finer things in life same brant um i.e watching mtv cribs or just listening to multi-millionaires and billionaires interviews this show is an Absolute favourite of mine.

47:31Thank you. He says, John Fredrickson is just another billionaire. He wanted to be rich and he did it with great expense, hard work, ingenuity and not taking no for an answer. Those to me are the typical traits of a billionaire. Thanks very much, Brent. Another listener says, greetings from Nigeria. Greetings back. From the very first day I stumbled upon this podcast, I've been listening to it non-stop, even going back to the very first episode. The information shared is incredibly informative and the explanations of financial terms are top notch. Thank you. Regarding the latest episode on John Fredrickson, in my opinion, he's a brilliant billionaire.

48:04Why? Because taking calculated risks is part of the journey. No risk, no glory. Fear only limits us. To survive in this world and achieve greatness, one must be an opportunist. And that's exactly what brought him his wealth. Thank you from our listener in Nigeria. So who've we got next time? So we have the American actor, a filmmaker, playwright, studio mogul, all around businessman and Hustler and also the guy who pioneered a famous drag character. Yeah, it is Tyler Perry. He went from putting on plays to an audience of one to becoming one of the most influential studio bosses in the US. That's right.

48:41He's worth$1.4 billion and he's made over 30 feature films and 1 ,700 episodes of television. Talk about a work ethic. And he got some of his business acumen from one of our other billionaires, no other than Oprah Winfrey. So that's Tyler Perry on the next episode of Good Bad Billionaire. Good Bad Billionaire is a BBC World Service podcast produced by Tamsin Curry. The researcher is Hannah Ramazani. The editor is Paul Smith and it's a BBC Studios production. For the BBC World Service, the commissioning editor is John Manel.