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ArcelorMittal Nippon Steel India has signed a definitive agreement with the Essar Group to acquire port, power, and other logistics and infrastructure assets in India for about $2.4 billion (₹19,200 crore).
The deal also envisages a 50-50 joint venture partnership between Essar and ArcelorMittal for building a 4 million tonne per annum (mtpa) LNG terminal at Hazira in Gujarat.
The transaction is expected to be funded by AM/NS India and completion of the deal is subject to regulatory approval.
The assets acquired are cash accruing and will generate operational synergies and strengthen the strategic integration of the company’s manufacturing and logistics chain, said AM/NS in a statement on Friday.
The company will be able to realise further synergies by rising throughput at the port assets to support the planned steel capacity expansion at Hazira.
After fighting a fierce corporate battle for three years, AM/NS India acquired the assets of Ruias-owned Essar Steel India in one of the largest stressed asset sales for ₹42,000 crore in 2019. The deal gave India-born British steel magnate Lakshmi Mittal a long-awaited foothold in India.
Assets bought
AM/NS will acquire a 25 mtpa all-weather, deep draft bulk port terminal adjacent to the AM/NS steel making plant at Hazira in Gujarat. It will also take possession of a 16 mtpa deep draft terminal at Visakhapatnam in Andhra Pradesh, along with an integrated conveyor connected to AM/NS India’s 8 mtpa iron ore pellet plant in the port city and a 12 mtpa deep-water jetty at Paradip, Odisha, along with a dedicated conveyor that handles pellet shipments from the Paradip pellet plant.
The power plants that have been acquired include a 270 MW multi-fuel power plant near the steelmaking facility and a 515 MW gas-based power plant, along with allied land that can be used for expansion at Hazira. Apart from this, the company will also take over the 100 km Gandhar-Hazira transmission line, connecting the steelmaking complex with the central electricity grid.
Essar repays $25-b loan
Rewant Ruia, Director, Essar Ports and Terminals, said the company has unlocked value for all its stakeholders with a multifold return on investments and will continue to focus on building new and modern core infrastructure assets in India and overseas.
Prashant Ruia, Director, Essar Capital, said that after consolidating businesses over the last four years, the group has now entered the next growth phase focussed on helping build a sustainable energy future for a greener world.
With this deal, Essar has concluded its monetisation plan and repaid a $25 billion (₹2 lakh crore) loan to banks. Its aggregate revenues will stand at $15 billion (₹1.2 lakh core) from asset under management of $8 billion (₹64,000 crore).
“By monetising assets in a planned and strategic manner that were built with earlier technologies over the last several years, Essar is now poised to reinvest in new assets with the latest, more efficient, and ESG-compliant technologies to last the next several decades. Essar has planned investments in its core sectors of energy, infrastructure, metals & mining, and technology & services,” said a press statement from Essar group.
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