Indians appear to be at the vanguard of driving the steel consolidation in Europe . Through the Thyssenkrupp deal, the Tatas are the latest to leave their imprint on the industry in the continent where LN Mittal Sajjan Jindal , and Liberty House ’s Sanjeev Gupta have previously shopped for giant mills making the primary infrastructure alloy. ArcelorMittal previously acquired the 10-million tonne Ilva, a troubled Italian steelmaker. In May this year, Jindal acquired the 2-MTPA Aferpi, Italy’s second largest steelmaker, with plans to make it bigger. Gupta of Liberty House has also been making acquisitions in France and in the UK. With tariff walls being raised, steelmakers are trying to scale these duty structures by buying into advanced markets in Europe, driven by their improved understanding of the steel market over the past decade.June has been a good month for Indians buying into Europe’s steel industry. It was in June 2006 that Lakshmi Mittal acquired Luxembourg-based Arcelor in a $33-billion deal. Combining it with Mittal Steel, it went on to become the world’s largest steel company, ArcelorMittal. It is exactly 12 years later that Tata Steel forged a 50:50 joint venture with Thyssenkrupp AG of Germany. Two of Europe’s largest steel companies now have Indian owners and are under desi control.“This is a very positive step for Indian entrepreneurship. Indian steel entrepreneurs have acquired the required competence and expertise to run global businesses. Steel is a global commodity and in this business, India is now the second largest producer. They have matured and they now have the confidence to deal in the global arena,” Anjani Agrawal, global steel leader, E&Y said. Corporate watchers say globally there are mainly two buyers of industrial assets, the Indians or the Chinese. And, it is the Indians who are moving quickly ahead of the Chinese to acquire steel assets in Europe.“Any large player would be aware and evaluate options for growth, which include opportunities in India and also elsewhere in the world in the form of stressed assets,” Agrawal added. He cited the example of LN Mittal, who was among the first to display Indian entrepreneurial skills in turning around struggling steel businesses globally. With Ilva, Mittal has proved that his appetite for good assets remains the same.Industry experts believe Indians are ideally placed to ride the current wave of consolidation sweeping across Europe’s steel industry. Elsewhere in the world, the Chinese are cutting down production by closing polluting old mills, while the US steel industry has been grappling with low productivity and production cuts. The US has only recently started looking at revamping and adding new facilities, which includes an investment of $1 billion in two units in the US from JSW Steel: The investments even prompted a tweet from US president Trump.It is also linked to a fundamental change in the cost structure of the steel industry. “Steel is no longer a local industry like it used to be even a decade back. It is now a globally competitive industry,” said Tridibesh Mukherjee, former deputy MD of Tata Steel. The cost dynamics in the industry have undergone a complete change since 2008 when raw materials accounted for 30% of cost in 2008 with internal costs having a 70% share. Now, raw materials take up 70% of production costs while internal costs account for less than 30%. And, there is little room to play around with the 30% share. This is prompting Indians to look at Europe as a manufacturing base.“Take Jaguar-Land Rover, for instance. Indians have shown remarkable entrepreneurial skills in manufacturing, unlike the Chinese who have focused on achieving number one status in manufacturing at home,” he added. Investing in Europe makes sense for Indians who remain net exporters of steel since demand has not grown in step with capacity. “With trade barriers and tariff walls coming up in Europe and elsewhere there is need to protect the market. This can only be done by investing internally,” said Malay Mukherjee, one of the key lieutenants who helped build LN Mittal’s global steel empire.“So large Indian steelmakers are now buying into these export markets.” Also, buying into brownfield European steel assets is considerably less expensive compared to putting up a green-field steel plant in India due to delays in land acquisition and approvals. “If a 2-million tonne plant can be bought at $50 million, a similar size capacity would require an investment of nearly $2 billion in India without counting the delays,” Malay Mukherjee said. The other advantage is access to technology and advanced products like high-tensile steels in consumer sectors like automobiles.With India emerging as an auto manufacturing hub, this technology can be very useful for Indian steelmakers, given the new norms in auto manufacturing. Thyssenkrupp’s value added steels portfolio is among the best in grade particularly in automotives, and is preferred by nationalistic German automakers like Mercedes and BMW. A lot of that learning will eventually come to India. After all, as Tridibesh Mukherjee pointed out: “A merger is not about the hardware alone. It is also about the people and the software.”