FROM his grand top-floor office in Berkeley Square, Lakshmi Mittal commands a westward view over London's West End to Kensington Gardens, where he lives in one of the city's swankiest houses. The giant swimming pool in its basement is one reason why the leader of the world's steel industry, and Britain's richest man, looks so fit and relaxed. Born in India, Mr Mittal has long made London his home and first came to notice there in 2002 when Tony Blair, the prime minister at the time, controversially put in a good word for him in a Romanian deal. When he made his sudden and spectacular appearance on the European business scene in early 2006, Mr Mittal was still a relative unknown. French government ministers, frightened by his takeover bid for the largely French Arcelor steel firm, did not know whether they were under attack from America or India.

The answer was neither: Mittal Steel was a company from everywhere and nowhere, which helps to explain why its integration with Arcelor to form ArcelorMittal, the world's largest steelmaker, went so surprisingly smoothly. Most mergers fail: from AOL Time Warner to DaimlerChrysler, the corporate landscape of the past decade is littered with wrecks. Just as surprising was the way in which Mr Mittal managed to overcome opposition to the deal from the business establishment and the French government—and has now gone on to increase profits in the new firm's first full year. On February 13th ArcelorMittal announced that it had made $19.4 billion, before tax and interest, on sales of $105 billion in 2007—up 27% on the two firms' aggregated profits in the previous year. Mr Mittal's 43% stake makes him the world's fifth-richest man, with a fortune of some £19 billion.

It helps, of course, that Mittal Steel made its move on Arcelor—a European champion forged in 2001—just as steel prices were heading for record levels, driven by Chinese demand. Mr Mittal was not the only one thinking of global consolidation in late 2005. Arcelor was fighting with ThyssenKrupp of Germany over Canada's Dofasco. Corus, the firm formed by the union of British Steel with a Dutch firm, Hoogovens, was looking for a strategic buyer, and ended up choosing India's Tata over Brazil's CSN. And Mittal Steel itself (then 88% owned by the Mittal family) had just bought International Steel, a collection of bombed-out American mills, overtaking Arcelor in the process to become the industry's number one. So Mr Mittal was already leading the race to consolidate the industry at the time of the Arcelor deal, which confirmed him as the winner with the creation of a new giant that accounts for one-tenth of world steel output.

The ArcelorMittal merger went so smoothly, Mr Mittal explains, because the two companies had been formed as a result of some 50 smaller mergers between them. Having survived all these previous deals, the firms' managers were not afraid of change. Arcelor was the fusion of Arbed in Luxembourg, Usinor in France and Aceralia in Spain. The origins of the Mittal steel empire were less obvious. The Mittal family had a steel business in their native India, but felt expansion was constricted by regulation and the presence of both a state-owned rival, SAIL, and a private national champion, Tata Steel. So Mr Mittal's father helped him start a steel mill from scratch in Indonesia in 1975. The trick he learned there was to move into steelmaking using imported direct-reduced iron (DRI) pellets instead of more expensive scrap or imported steel billets.

The younger Mittal's emergence onto the world steel scene was not part of some global vision, but was the result of opportunism, a bold eye for a deal and an ability to turn round failing firms. His supplier of DRI was a struggling state-owned steel firm in Trinidad. When the Trinidadians spotted Mr Mittal's success in Indonesia, they invited him to turn their firm around under contract, and he eventually bought it in 1994. At around the same time he acquired another DRI steel plant in Mexico, and two more in Canada and Germany. All of these were distressed assets that governments wanted to offload. By the end of the 1990s the brash newcomer from Kolkata by way of Jakarta was even picking up assets in America, where the rust-belt steel firms were going into decline, and in Eastern Europe, where governments were keen to privatise loss-making state-owned firms. Today Mr Mittal's firm owns one Chinese steel company and holds a stake in another. The steel giant thus straddles the developing world (with opportunities for growth) and the developed world (with scope for consolidation).

Boldness be my friend

Last summer ArcelorMittal launched its new corporate identity with a lavish party at the Musée Rodin in Paris. The company's motto (“Boldness changes everything”) is no empty boast, but a neat reflection of the way Mr Mittal's dealmaking created a world-leading steel giant from virtually nothing in barely a dozen years. People expect that sort of thing in Silicon Valley—but not in mature industries like steel.

Can ArcelorMittal continue to grow and thrive? One potential threat comes from the consolidation of iron-ore suppliers: if BHP Billiton succeeds in its bid for Rio Tinto, the combined firm would have over one-third of the freely traded market. But Mr Mittal already has in-house ore supplies to cover half his needs and expects this to grow to three-quarters in a few years. Another challenge will be to carry out rationalisation in Europe in the face of political opposition. After a summons from President Nicolas Sarkozy, Mr Mittal has agreed to review plans to close a plant in north-east France. But perhaps the biggest test of all will be to cope with the emergence of China as a steel exporter. Its steelmakers may be protected and inefficient now, but sooner or later rationalisation and greater technical skill will produce big firms that can make cheap steel. China's rapid development, hitherto a huge boon for Mr Mittal, may yet turn into a threat.