ArcelorMittal, the world’s largest steel company, is confident of not only turning around the stressed asset of Essar Steel, but will also explore setting up a new steel plant closer to the company’s current pellet unit at Paradip in Odisha.

“We can set up a steel manufacturing unit near Essar Steel’s pellet plant at Paradip. We have a long-term aspiration to significantly grow the asset and partner the government’s vision to grow steel capacity in India to 300 million tonnes,” Aditya Mittal, President, ArcelorMittal, told BusinessLine over phone from his London office.

Aditya is the son of ArcelorMittal promoter Lakshmi Mittal.

Essar Steel is currently operating at about 5 million tonnes, which can be expanded to 8.5 million tonnes, and efficiency can be improved further before reaching the installed 10 million tonnes, he added.

Added advantage

There is also scope for efficiency improvement in downstream pipe and plate mills.

The pellet plant at Paradip and Visakhapatnam is an added advantage.

When asked as to why ArcelorMittal did not bid for other steel assets such as Bhushan Steel, Mittal said that he personally visited both Bhushan Steel and Essar Steel and the bidders' involvement required to turnaround Essar Steel is more compared to that of the other company.

“But actually that’s our strength,” he said.

Luxembourg-headquartered ArcelorMittal is engaged in a pitched battle with Russia’s VTB Capital to take over Essar Steel even though questions are being raised on the eligibility of both the companies.

ArcelorMittal had to sell-off its stake in bankrupt Uttam Galva Steel to qualify for Essar Steel bidding.

VTB, on the other hand, has inserted an option in its bidding documents to ease out one of its partners Rewant Ruia, son of Essar Steel promoter Ravi Ruia, if need be.

Mittal said: “We are fully eligible for the Essar Steel bidding. We have an investment grade rating that is similar to that of India’s sovereign rating. Two months back, we even raised a five-year bond at 0.95 per cent coupon.”

Nippon Steel venture

Asked on the need for joint venture with Nippon Steel, Mittal said a partner like Nippon Steel can add value as they can bring additional technology, new products and improved efficiency.

“Moreover, it means that auto companies who have approved ArcelorMittal or Nippon Steel as their preferred supplier globally can start purchasing from Essar Steel India after the restructuring. It will provide a greater number of ready-made customers so it’s very much to the benefit of Essar Steel,” he said.