The Ruias and Mittals have buried the hatchet after battling in and out of courts for the past four years.
ArcelorMittal Nippon Steel India (AM/NS India), a joint venture between ArcelorMittal and Nippon Steel, announced on Friday that it had reached a definitive agreement to acquire port, power and other logistics and infrastructure assets in India from the Essar group for a net value of approximately $2.4 billion.
The settlement for the assets comes almost three years after ArcelorMittal and Nippon Steel jointly acquired Ruia-owned Essar Steel (now AM/NS India) for $5.7 billion in one of the most successful resolutions under the Insolvency and Bankruptcy Code (IBC).
The deal also envisages a 50:50 joint venture partnership – between Essar and ArcelorMittal – for building a 4MTPA LNG terminal at Hazira.
The agreement with AM/NS is for assets that are captive, and include ports in Gujarat, Andhra Pradesh and Odisha and those allied to its steelmaking, but which were not part of the insolvency resolution process.
In a statement, the company said that the transaction was expected to be funded only by AM/NS India.
The issue of ownership of port assets had been under litigation since 2020 after AM/NS India moved the Gujarat High Court. It was shortly after the Essar Steel acquisition in December 2019 concluded following an intense legal battle between the two sides spanning more than two years.
The settlement puts to rest the ongoing legal dispute over the port assets that include a 25 MTPA jetty at the all-weather, deep draft bulk port terminal at Hazira, Gujarat, captive and adjacent to AM/NS India’s flagship steel plant; a 16 MTPA all-weather, deep draft terminal at Visakhapatnam, Andhra Pradesh; a 12 MTPA deep-water jetty at Paradip, Odisha.
Full ownership of the port assets would ensure seamless connectivity and supply chain security for movement of raw materials and finished goods between AM/NS India’s manufacturing facilities in western, eastern and southern India, as well as for exports, the company said. The acquisition of the power and transmission assets would ensure cost-effective, long-term power supply and energy efficiency at Hazira.
The acquisition assumes significance as AM/NS is ramping up its steel production capacity. The joint venture plans to debottleneck existing operations and achieve 8.8 mt capacity by the end of 2023, while expansion to 14.4 mt is in advance preparation.
Essar said that the deal concludes its planned asset monetisation programme and completes debt repayment plan of $25 billion (Rs two trillion) with the Indian banking sector being almost fully repaid.
Rewant Ruia, Director, Essar Ports & Terminals Limited, said, “With this deal, which yields a multifold return on our investments, Essar Ports & Terminals has unlocked value for all its stakeholders and will continue to focus on building new and modern core infrastructure assets in India and overseas.”
The group is now poised for the next phase of growth. Prashant Ruia, Director, Essar Capital, said “Essar is now repositioned for growth and resurgence. After consolidating our businesses over the last 4 years, we have now entered the next growth phase focused on helping build a sustainable energy future that will impact lives and livelihoods for a greener world.”
Key assets being acquired include
