Calcutta: Essar Steel provides the "best opportunity" for ArcelorMittal to step into the Indian market, a senior executive of the world's largest steel maker said, the comment coming in the backdrop of years of toil its largest shareholder made to build a presence in the country where he was born and brought up.
The Luxembourg-based company, with a capacity of 93.1 million tonnes in annual crude steel, may see the capacity go up at least 10 per cent if it bags debt-laden Essar Steel. It will also make steel czar Lakhsmi Niwas Mittal, chairman and CEO of ArcelorMittal, a significant player in India after Tata Steel, JSW and SAIL.
"This (Essar) appears to be the best opportunity now," Brian E. Aranha, executive vice-president and head of strategy, ArcelorMittal, said over telephone from Belgium.
The plant has a nameplate capacity of 9.6 million tonnes even as utilisation was about 6.5 million tonnes.
The unit is a complex operation - iron ore pellets are sourced and brought through a pipeline to Odisha's coast; and transported by ship to Hazira, Gujarat, where it is converted into steel with natural gas as the feedstock.
Aranha said ArcelorMittal has deep domain knowledge in the entire process that Essar follows.
"We are running these operations successfully somewhere in the group. The research and development in the company runs long and deep. No doubt, ArcelorMittal is best suited for the company," he added.
The opportunity with Essar comes at a time the steel industry is out of the woods after China, the world's largest producer by far, closed illegal plants on concerns over pollution and financial health, curtailing the oversupply of the alloy in the global market and aiding in the price rise.
ArcelorMittal is learnt to have a dedicated team of 20-25 executives from various disciplines working on the Essar deal which can provide a unique opportunity to Mittal, who went to college in Calcutta and then built his steel empire by acquisition.
Multiple efforts
The company's efforts to build an integrated plant from scratch in Jharkhand, Odisha and Karnataka over the last decade were stuck over the acquisition of land and natural resources.
Its proposal to build a plant in a joint venture with public sector SAIL is yet to make headway.
Moreover, its investment in cold rolled steel maker Uttam Galva Steel Ltd turned dud and the company has gone into bankruptcy.
However, whether ArcelorMittal's comprehensive bid for Essar is going to be considered will be known on March 5 after it passes legal muster.
