ArcelorMittal forms JV with Nippon Steel to run Essar Steel
18 Dec 2019
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ArcelorMittal on Tuesday announced the completion of the acquisition of Essar Steel India Limited (ESIL), and the establishment of a joint venture with Nippon Steel Corporation of Japan to run the Indian steel company.
The joint venture, called ArcelorMittal Nippon Steel India Limited, will own and operate ESIL with ArcelorMittal holding 60 per cent of the joint venture and Nippon Steel holding the remaining 40 per cent.
Aditya Mittal, president and CFO of ArcelorMittal, has been appointed chairman of AM/NS India, and Dilip Oommen has been appointed AM/NS India’s CEO.
“The acquisition of Essar Steel is an important strategic step for ArcelorMittal. India has long been identified as an attractive market for our company and we have been looking at suitable opportunities to build a meaningful production presence in the country for over a decade. Both India and Essar’s appeal are enduring, Lakshmi Mittal, chairman and CEO of ArcelorMittal, said.
“We are also delighted to be embarking on this together with Nippon Steel, with whom we have a trusted, long-term relationship. Our combined strengths and technology will bring many new opportunities which will allow us to make a positive contribution to India’s target to grow steelmaking capacity to 300 million tonnes per annum by 2030, and for its manufacturing sector more broadly,” he added.
“Nippon Steel and ArcelorMittal will bring out AM/NS India’s potential by providing it with their respective business experience and world-leading advanced technologies, so as to promptly implement the resolution plan and realise its further business expansion. I am confident that AM/NS India will play a significant role in the development of India’s steel industry, as one of its participants,” Eiji Hashimoto, representative director and president of Nippon Steel, said.
AM/NS India is an integrated flat steel producer, and the largest steel company in western India. Its current level of annualised crude steel production is 7.5 million tonnes. It also has iron ore pellet facilities in the east of India, with current annual capacity of 14 million tonnes.
AM/NS India plans to increase finished steel shipments to 8.5 million tonnes over the medium-term. This will be achieved by initially completing ongoing capital expenditure projects and infusing expertise and best practice to deliver efficiency gains, and then through the commissioning of additional assets, while simultaneously improving product quality and grades to realise better margins.
The company aims at increasing finished steel shipments to between 12 and 15 million tonnes through the addition of new iron and steel making assets in the longer term, and play an active role in the growth of Indian steel industry.
Last month, India’s Supreme Court had cleared the way for ArcelorMittal to take over Essar Steel following a legal tussle that dragged through multiple courts for over two years. ArcelorMittal and Nippon Steel had bid jointly for Essar, which has a capacity of 10 million tonnes of steel per year.
Essar Steel, which had debts of nearly Rs50,000 crore, was among twelve large steel and infrastructure companies that were referred to India’s bankruptcy court by the Reserve Bank of India (RBI) in 2017.
