Essar Steel plant can be made bigger: Arcelor Mittal

Arcelor Mittal’s proposal for Essar Steel includes a plan to increase the plant’s capacity from the current 10 million tonnes.

Brian Aranha, executive vice-president and head of strategy at Arcelor Mittal, said Essar Steel was a large facility and there was scope to grow the plant even bigger. Asked to what extent it was possible to ramp up capacity at Essar, he declined to divulge details citing confidentiality clause of the proposal, but said it was part of the plan submitted by the company.

Aranha was part of the team that had done due-diligence of the Essar Steel plant.

Industry sources, however, said it was possible for Essar Steel to ramp up capacity to 15 million tonnes, which was at one point part of the company’s expansion plan.

Essar was a unique collection of assets with all its facilities, the pellet plant, arc furnaces and Corex operations, all of which fit into Arcelor Mittal’s scheme of things, Aranha said.

Arcelor Mittal has 36 electric arc furnaces and an iron ore production capacity of 57.4 million tonnes.

Essar Steel's manufacturing facility comprises ore beneficiation, pellet making, iron making, steel making, and downstream facilities, including cold rolling mill, galvanising, pre-coated facility, steel processing facility, extra wide plate mill and a pipe mill.

Arcelor Mittal had worldclass capabilities to operate those sides, Aranha said. “We have a brand name that is known across the world, cutting-edge technology and research capabilities, probably better than any potential competitors,” he said.

Arcelor Mittal has a 17 per cent share of the global automotive market.

Aranha also talked about Arcelor Mittal's turnaround experience in Poland, the Czeck Republic, and Kazakhstan. The turnaround experience is relevant in the case of Essar Steel, which is facing bankruptcy.

It owes banks around ~440 billion and is one of the 12 cases mandated by the Reserve Bank of India for insolvency. Arcelor Mittal is going all out for Essar Steel largely to gain a foothold in the market. “Growth in the Indian market in the next 10 years would probably not be seen in any other market,” Aranha said. It had tried in the past to set up projects in India but none of it materialised.