Essar Steel setting up mine-based facility in N America; plans $4 billion expansion

Mumbai: Essar Steel Holdings Ltd, a part of Essar Global Ltd, today started work on its first steelmaking facility in Iron Range, Minnesota, US, involving investment of $1.6 billion. The Ruia-controlled firm also announced plans to invest $4 billion to expand its operations in North America.

Essar Steel Holdings, which acquired Minnesota Steel Industries LLC last year, said its new facility will be North America's first mine-based steel plant and the single largest investment made in the Mesabi range in recent times.

Essar Steel Holdings, which acquired Minnesota Steel in 2007, also renamed it as Essar Steel Minnesota, LLC. The steel pant also owns more than 1.4 billion tonnes of iron ore resources in the Mesabi range.

''We are excited about starting this project. Today's groundbreaking is another step towards our goal of building a large presence in the steel sector in the Americas. We thank Governor Pawlenty and the local administration for lending their support to our Iron Range project. Essar remains committed to North America with investments of over $4 billion in the region and currently employs more than 8,000 people here." Essar Group chairman Shashi Ruia said in a website release.

Besides iron ore mining and production, the project will include a concentration plant, a pellet plant, a direct-reduction iron (DRI) plant and steelmaking facilities. At full production Essar Steel Minnesota will employ nearly 500 people. Iron ore pellets will be produced within about two years from the start of construction. Production of DRI pellets and steel slabs is expected to begin the fifth and the sixth year onwards, respectively, the release said.

''We are delighted to start this mine based project in the prolific Mesabi range, which is one of the largest sources of high quality iron ore for US steelmakers. This is integral to our strategy to become an efficient global steelmaking company,'' said Madhu S Vuppuluri, president and CEO of Essar Minnesota Steel, LLC.

The production from this facility will also support the Essar Steel Algoma plant in Sault Ste Marie, Ontario, Canada.

Essar acquired the Algoma plant in 2007 for $1.63 billion and has committed a capex of $500 million in the next five years. Following the acquisition, Essar Steel Algoma increased its capacity from 2.4 MTPA to 4 MTPA in less than a year. The synergies between the Minnesota and Algoma facilities will strengthen Essar's presence as an integrated steelmaker, with high value-added products, in the North American market.

The Iron Range project will be located at the site of the former Butler Taconite operation, it said.

The company also plans to set up a greenfield steel plant in Trinidad & Tobago, for which no concrete investment commitment has been made so far.

An integrated steel producer, Essar Steel Holdings Ltd has a presence in India, Canada, the US, the Middle East and the Far East. With aggressive expansion plans across the world, its capacity is expected to go up to 20-25 million tonnes per annum.