ever that the growth in GDP and steel market growth has not correlated,” he adds. China overproduced and utilisation went from 85% to 70%, so now the global market is flooded with commodity steel – killing off many plants that became unviable. The UK steel industry was a particular casualty. A visit to the northern England city of Sheffield, where Primetals still employs technology experts, brought this home to Hamon, who before joining the company would have only related the ‘Steel City’ to the British cult comedy The Full Monty.
Steelmaking is a capital-intensive market and Hamon points out that many customer EBITDAs have fallen to below 10%. “It’s really hard for steelmakers to stay afloat as it is a very capital-intensive market. You need to build heavy infrastructure to produce.” While the market is flooded with commodity steel, the segment with sustained demand (not exceeded by supply) is the flat product requiring high levels of alloys for highest performances.
Birth of Primetals Technologies As the steel industry entered the current low-growth environment, it was clear that future success depended on the right partnerships and market differentiation. Primetals was launched on 7 January 2015 as a joint venture between Siemens and Mitsubishi Heavy Industries, once the two engineering giants agreed to combine their strengths from a geographical and market- positioning perspective. From the very beginning, Hamon was put in charge of the Group Treasury for the new group.
The Linz-based operation, having developed its technology over decades after reconstructing what was Europe’s largest steel plant after the Second World War, specialised in the upstream business – processing iron ore and creating the alloys (while prioritising emissions control). The
16
The number of currencies Primetals Technologies trades in on a regular basis
20+
Japanese side was mainly downstream – the rolling and processing which defined the high quality of the end-steel product. “It would have been strenuous for each company to subsist on its own and even compete,” adds Hamon. “And at the end of the day the steel business is mainly domestic, as it is mostly made and delivered in the country that needs it directly.
Hence our geographical coverage created synergies. Providing what amounted to a service business on site, we reached a large proportion of the global market.”
In October 2019, Mitsubishi-Hitachi Metals Machinery, a Mitsubishi Heavy Industries group company, announced it would acquire the Siemens stake in Primetals, and the transaction was completed at the end of January 2020. Although the firm’s headquarters are in London, Primetals’ treasury operations are mostly run from Linz in the aftermath of Brexit. Hamon, who had already been structuring an integrated treasury operation as Head of Group Treasury, was then additionally made CFO of Primetals Technologies Treasury in February 2018, before becoming Head of Group Finance in December 2020. Once the company was wholly owned by the Japanese firm, he found himself having to centralise the treasury operation.
Images: Joseph Krpelan, Primetals Technologies
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