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Germans assess centralised raw materials buying

Germany – Comments are continuing to circulate about the possible formation of a centralised industry-wide raw materials purchasing company in Germany.

‘We would be very interested,’ Michel Wurth, board member at leading steelmaker ArcelorMittal, has acknowledged to the German edition of the ‘Financial Times’. He added that he was engaged in preliminary discussions with ThyssenKrupp’s former CEO Eckhard Schulz which will lead to the formulation of a position paper. The objective of any such enterprise would be to increase the delivery of key raw materials for the steel industry, and to reduce volatility.
A joint purchasing company would be a response from steel producers to the soaring costs of their major raw materials, namely scrap, iron ore and coking coal. A call for the creation of a German ‘Commodity AG’ was first made by Mr Schulz in autumn 2010. Such an inter-company enterprise could be involved in mining projects, he has suggested, or in the auctioning of mining rights. Criticism of the idea has come from Saarstahl chief Klaus Harste who describes purchasing as a ‘sovereign function’ for each company in a recent interview with the German magazine ‘Spiegel’.
A central purchasing unit devalues the individual commercial performance, he maintains. ArcelorMittal is already investing heavily in securing its supply of resources. This year, the Luxembourg-based firm expects to plough US$ 1.4 billion into mining operations to protect itself against rising raw material prices.

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