ArcelorMittal SA, the world's largest steelmaker, said on Friday it would form a joint venture with Japan's Nippon Steel & Sumitomo Metal Corp to bid for bankrupt steelmaker Essar Steel India Ltd.
ArcelorMittal SA, the world’s largest steelmaker, said on Friday it would form a joint venture with Japan’s Nippon Steel & Sumitomo Metal Corp to bid for bankrupt steelmaker Essar Steel India Ltd. The joint venture is the steelmaker’s latest attempt to crack the world’s fastest growing steel market, where it has struggled to make inroads due to bureaucratic delays despite trying for close to a decade.
ArcelorMittal is in the final stages of signing a deal with India’s state-run SAIL, with which it first signed a preliminary understanding in 2015 to jointly produce 1.2 million tonnes of automotive steel a year, but disagreements over commercial terms had delayed the venture. The company said it submitted a plan on Feb. 12 to India’s National Company Law Tribunal, which deals with insolvency and company disputes, to bid for Essar Steel in partnership with Nippon Steel.
Essar Steel was among a dozen of India’s biggest debt defaulters that were pushed to bankruptcy court last year after a central bank order aimed at clearing $147 billion in bad loans at the nation’s banks choked lending. ArcelorMittal sold its entire stake in India’s Uttam Galva Steels to the company’s founders at less than the market price of the stock, a member of Uttam Galva’s founding Miglani family told Reuters last month.
The sale could free ArcelorMittal to bid for other Indian steel assets which are being auctioned off as part of insolvency proceedings. “Partnering with NSSMC for Essar Steel was always our intention and adds further strength to our offer,” said ArcelorMittal’s India born Chief Executive Lakshmi Mittal.
ArcelorMittal and Nippon Steel have a history of forming joint ventures, with their oldest venture dating back to 1987, and the most recent one happening in 2014.