Luxembourg-based ArcelorMittal has announced that its subsidiary ArcelorMittal India Private Limited (AMIPL) has submitted an offer for Essar Steel India Ltd. that is “in line with the corporate insolvency resolution process for Essar.”
AMIPL indicates it has set out “a detailed industrial plan for Essar aimed at improving its performance and profitability and ensuring it can participate in the anticipated growth of steel demand in India.”
In a news release announcing its bid, ArcelorMittal states its plan “highlights the extensive experience and track record of the group in the successful acquisition and integration of under-performing assets. Essar would also have access to the deep bench of technical expertise and knowledge from across the group, which is unparalleled in the steel industry.”
“Essar provides a compelling opportunity for ArcelorMittal to enter the high growth Indian steel market,” says Lakshmi Mittal, chairman and CEO of ArcelorMittal. “The offer submitted today by AMIPL includes a detailed investment plan to address operational issues in Essar’s existing asset base. With our industry expertise and renowned operating prowess, we believe we are uniquely equipped to implement a successful turnaround [that] would be beneficial to Essar’s stakeholders.”
Aditya Mittal, group chief financial officer and CEO of ArcelorMittal Europe, adds, “This opportunity aligns with the group’s strategy of selectively investing in attractive projects to maximize long-term shareholder value. India is expected to be the world’s fastest growing economy over the next decade, and as the economy grows its steel intensity will also increase. We believe our technical experience and management know-how, gained from many successful acquisitions and integrations, will ensure success for the various steel and pelletizing operations at Essar.”
Essar Steel is an integrated flat steel producer with its main production facility in the Indian state of Gujarat. It has a nameplate crude steel capacity of 9.6 million metric tons per year, according to ArcelorMittal. But the steelmaker adds, “The current maximum achievable crude steel production level [at Essar] is 6.1 million tons per year, due to a bottleneck in the steelmaking and casting process.”
In 2017, ArcelorMittal had revenue of $68.7 billion and crude steel production of 93.1 million metric tons, while its own iron ore production reached 57.4 million metric tons.