Trinidad: The Big League

One of the first industries to be developed at Point Lisas was the Iron and Steel Company of Trinidad and Tobago (ISCOTT), a state-of-the-art plant designed by Midrex Corporation of the US. During its early years of operation, ISCOTT become saddled with myriad problems which reduced output to about 40% of capacity and made it a drain on the treasury and a burden on the taxpayer.

But in 1989, the government took a decision to lease the plant to the India-based Ispat Group of Companies. At the time, the name Ispat was virtually unknown in the region. But five years later, Ispat's western expansion programme has made the Caribbean part of the global steel industry.

India and Trinidad and Tobago have always had strong cultural ties (over 40% of the population of Trinidad is of Indian descent). Ispat's westward expansion programme, driven by the Group's Vice-Chairman, 42-year-old Lakshmi N. Mittal, set out to make the Group a major player in the global steel industry. From Trinidad, Caribbean ISPAT Limited (CIL) has been able to penetrate markets in Latin America, the Middle and Far East, Europe and the Caribbean. An employee motivation scheme produced a dramatic reversal in productivity; today the plant operates at 110% of capacity.

In the last quarter of 1994 Ispat exercised its right to purchase the plant after the first five years of the lease. This means that within the near future approximately US$75 million will be invested in the further development of the plant and its environs. The company has allocated US$20 million to the improvement of environmental pollution control systems and to associated infrastructure such as roads and drainage, while US$50 million will be funnelled into plant upgrades.

This will bring operations into line with international standards both in terms of technology and environment pollution control. Production capacity will increase to 1.2 million tonnes of Direct Reduced Iron (DRI), 1 million tonnes of billets and100,000 tonnes of wire rods. Within the next three years, Ispat will divest 40%of its shares to Trinidad and Tobago nationals, offering special arrangements to encourage employee share ownership.

Inspired by the successful turnaround of the plant in Trinidad and Tobago and motivated by the possibilities for south-south relations, Mittal has now focused his attention on Mexico. In 1991 the Ispat group acquired the largest of the state-owned companies there, and achieved a remarkable turnaround in the first year of operations. In 1994, ISPAT positioned itself to benefit from the North American Free Trade Agreement by acquiring Sidbec Dosco of Montreal, the fourth largest plant in Canada.

With plants in India, Indonesia, Canada, Mexico and Trinidad and Tobago, Ispat is now the largest producer of sponge iron in the world. It has put Caribbean steelmaking on the world map; in Trinidad and Tobago, steel is now the second largest earner of foreign exchange.