ArcelorMittal diversifies with stake in French energy

Luxembourg’s ArcelorMittal locked down its new stake in a French company that makes tubes for oil and gas drillers and which could see growth from greener hydrogen, geothermal and carbon capture uses, the world’s number-two steelmaker said.

ArcelorMittal completed its purchase announced in March of a 28% share of Vallourec from private equity firm Apollo Global Management for about €955 million, the company said. The Luxembourg company said it won’t make any effort to buy the rest of Vallourec for at least six months.

Vallourec’s long and rugged steel tubes compete with Luxembourg-based Tenaris for sales to shale oil drillers in the US and offshore oil wells in Brazil. Vallourec’s production plants in both countries are also growth markets ArcelorMittal has targeted. About 80% of Vallourec’s earnings originate in the Americas, ArcelorMittal said.

About 10% to 15% of Vallourec’s earnings could come from infrastructure in green-energy alternatives like hydrogen by the end of this decade, ArcelorMittal said.

ArcelorMittal said it expects it could claim $150 million next year for its stake in Vallourec’s projected profits. Vallourec, headquartered in a Paris suburb, should earn about €1 billion this year, S&P Global Ratings said in April while upgrading its opinion of the tube-maker’s debts.

Luxembourg officials announced plans in June for a €39 million effort to integrate the country into a European network of clean-hydrogen production to shift transportation and industrial production off hydrocarbons. Its plans for a Luxembourg Hydrogen Valley, funded with about €8 million from an EU public-private partnership backing hydrogen technologies, is forecast to produce industrial quantities of the gas from 2026.