ArcelorMittal keeps $6.5-billion steel, power project in Karnataka ‘under review’

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March 11, 2020 3:15 AM

ArcelorMittal, along with its partner Nippon Steel, completed the acquisition of the erstwhile Essar Steel (later change its name to AMNS India) though the insolvency route in December, 2019 for Rs 42,785 crore.

ArcelorMittal had in June 2020 entered into a MoU with the Karanataka government for the proposed investment.ArcelorMittal had in June 2020 entered into a MoU with the Karanataka government for the proposed investment.

Even as ArcelorMittal looks to enhance finished steel production capacity at AMNS India to more than double to 15 million tonne per annum (mtpa) through its joint venture partner Nippon Steel, it has kept its own $6.5 billion proposed greenfield steel and power project in Karanataka under review, indicating that the company would like to concentrate more on the Western market in the near-term than in the South.

The world’s largest steelmaker had executed with the Karnataka government a lease-cum-sale agreement for 2,643 acre of land on December 26, 2018 for its proposed 6 mtpa steel plant with a captive 750 MW power plant, but its latest annual report said, “The project is currently under review”. A mail sent to the company seeking clarification on the same elicit no answer. ArcelorMittal had in June 2020 entered into a MoU with the Karanataka government for the proposed investment.

ArcelorMittal, along with its partner Nippon Steel, completed the acquisition of the erstwhile Essar Steel (later change its name to AMNS India) though the insolvency route in December, 2019 for Rs 42,785 crore. ArcelorMittal holds 60% stake in the joint venture that acquired AMNS India while Nippon holds the remaining 40%. The resolution plan incudes Rs 18,697 crore to be implemented in two stages over a period of six years.

“The first stage involves investments to increase the production of finished steel goods sustainability to 6.5 mtpa and includes completion of ongoing capital expenditure projects with respect to coke oven, second sinter plant, Paradeep pellet plant and Debuna beneficiation plant. The first stage also include investment in maintenance to restore current assets, the implementation of an environmental management plan and the implementation of ArcelorMittal’s best practices on raw material sourcing,” ArcelorMittal said in its annual report.

The second stage, it said, will involve investments to increase the production of finished steel goods from 6.5 mtpa to 8.5 mtpa by the end of 2024, including asset reconfiguration and the addition of coke oven, blast furnace and basic oven furnace. The company also aspires to increase AMNS India’s finished steel production capacity to 12-15 mtpa through the addition of new iron and steel-making assets, aimed at benefitting from the anticipated growth of the Indian steel industry.

Meanwhile, sources said the company is also looking to set up a greenfield steel-making unit in Odisha where it has recently got an iron ore mine that has around 51 million tonnes of reserve. India aims to enhance its steelmaking capacity to 300 mtpa by 2030-31 from around 145 mtpa now. Odisha may be the home of the large part of the proposed capacity expansion.

NRI billionaire L N Mittal, who has built his empire from the scratch, has mostly received rejections from India since the time he entered into a pact with the Jharkahnd government for setting up a mega steel plant way back in 2005 with a proposed investment of around Rs 50,000 crore. A ditto MoU signed next year with the Odisha government has to be annulled.

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