Jim Armitage: Lakshmi Mittal is over his metal fatigue and that’s a boost for the global economy. But investors may have to wait for the return of the big spender

Global outlook: ArcelorMittal’s debts may get worse before they get better

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The Independent Online

I’ve felt pretty well disposed towards Lakshmi Mittal since Britain’s richest man popped into my local for a cup of tea and tipped the barman £100.

Not that £100 means much to a tycoon whose family stake in his global steel empire is worth €8.4bn (£7bn). But, forgiving him for not grasping that drinking tea in a pub is just plain wrong (as is tipping, come to think of it), it’s the thought that counts.

The quarterly profits announced by ArcelorMittal – that global indicator of the manufacturing economy – will furnish the Cayman Islands trust that holds the Lakshmi family’s steel wealth with a further $131m (£80m) in the form of dividends. That may sound a lot to the average human, but by the Mittals’ standards, it barely registers.

A little over a year ago, they were banking more than three times that much every quarter.

However, the Chinese slowdown hit business hard, not helped by the company’s towering debt pile ($16bn at the latest count). ArcelorMittal fell into the red and the great man, named after the Hindu goddess of wealth, decided to cut the dividend dramatically. It plunged from 75 cents a share to just 20 cents. Contrast that with the boom years before the financial crisis, when shareholders were bathing in dividends of $1.50.

On Friday, though, Mr Mittal was talking of improving global demand for steel. Even moribund western Europe is expected to grow in 2014 for the first time in many years.

That’s good news for his company’s workers who, in France and Belgium, have clashed with management over redundancy programmes. Total global demand for steel is set to rise by 3.5 to  4 per cent this year, Mr Mittal said.

With that in mind, might it soon be time to whack up the dividend again, investors have asked? Might Lakshmi want to pad out his bank account a bit in the wake of the gift list for his niece’s recent £50m Barcelona wedding?

Probably not. Sales might be picking up, but the word from the Mittal camp is that he wants to get the company’s debt levels down to $15bn before loosening the dividend purse-strings. He’s made a fair start. In the last three months of 2013, net debt came down from $17.8bn to $16bn, but it’s going to be rising again before it falls due to the cost of ramping up production again to meet the renewed demand.

So the message is this: ArcelorMittal’s debts may get worse before they get better, but for the rest of us – and I don’t just mean the bar staff at The Greyhound - the economy is on the up.