ArcelorMittal overcomes obstacles, expands steel, petchem business

Billionaire Lakshmi Mittal-controlled ArcelorMittal, the world’s largest steelmaker, is poised to expand its business in India, with acquisitions of bankrupt steel companies and fresh investments in existing steel units and building a petrochemicals plant with state-owned HPCL. The company is expected to get approval for its ₹4,000 crore resolution plan for the bankrupt firm Uttam Galva Steels Ltd. It is also leading the race to acquire another insolvent company Indian Steel Corporation.

ArcelorMittal also plans to start the investments to build a mega steel plant in Odisha. The world’s largest steelmaker, along with joint venture partner Nippon Steel, is in the final stages of identifying the location for its 24 million tonne steel plant in Odisha’s Kendrapara district, with an investment of ₹1.02 lakh crore. The high-level clearance authority (HLCA) under chief minister Naveen Patnaik had approved the proposal to set up an integrated plant, which will create direct employment for 16,000 people.

For building the greenfield plant in Odisha, L.N. Mittal and the company’s senior officials had visited the proposed site in the seaside villages of Mahakalapada multiple times. The company is expected to begin with a 12 million tonne plant, with an initial investment of ₹50,000 crore at the location.

Uttam Galva will be ArcelorMittal’s second takeover of a bankrupt company in India after the ₹42,000-crore Essar Steel deal. The Japanese steelmaker Nippon Steel is ArcelorMittal’s joint venture partner in the Essar Steel acquisition. Mumbai’s bankruptcy court in the last week of April reserved its order on the application filed by the resolution professional of Uttam Galva, seeking the approval of the resolution plan filed by AM Mining India, a wholly-owned subsidiary of ArcelorMittal India. The company emerged as the sole bidder for Uttam Galva Steels in March 2021.

In 2018, a major portion of the Uttam Galva loans was taken over by ArcelorMittal, which paid off around ₹5,000 crore to the secured financial lenders, including SBI, after qualifying to acquire Essar Steel.

ArcelorMittal, which had a 29% stake in Uttam Galva, turned into a creditor with this, holding 87% voting rights in the committee of creditors (CoC) of Uttam Galva, which is among the largest makers of value-added steel in western India, with facilities located at Khopoli, about 75 km from Mumbai.

The resolution professional received four expressions of interest in January for Indian Steel Corporation. AM Mining Pvt Ltd, an affiliate of ArcelorMittal India is one of the applicants.

ArcelorMittal Nippon Steel India, formerly Essar Steel Ltd, also announced a ₹1,000-crore investment towards brownfield expansion of its Vizag pellet plant in Andhra Pradesh. With the expansion, the pellet production capacity at Vizag will increase by 35%, from 8 million tonnes per annum (MTPA) to 11 MTPA, the company says in a statement.

AM/NS India’s Vizag plant is already connected to a slurry pipeline in Chhattisgarh, for the uninterrupted transportation of raw materials from the source to the pallet plant. AM/NS has a long-term plan to increase the finished steel shipments from Hazira to 12-15 MT by expanding the existing 9MT steel-making capacities.

ArcelorMittal’s joint venture with HPCL -- HPCL-Mittal Energy Ltd (HMEL) -- is also in the process of setting up a 1.2 MT petrochemical complex at ₹24,000 crore. HMEL owns 11 MT Guru Gobind Singh Refinery at Bathinda. It was built for $4 billion in 2012. The partners have a 48% stake each in the JV.

London-based Marwari businessman Mittal, chairman of ArcelorMittal, had a long-cherished dream of building steel assets in India. Before acquiring Arcelor in 2006, Mittal had signed an agreement with the Jharkhand government in 2005. It expired five years later and was followed by MoUs with Odisha and Karnataka, which, too, failed to take off. It was at that time, that Essar Steel came up for sale and he partnered with Nippon and won the bid.