Russians battle ArcelorMittal

ArcelorMittal is competing with a consortium led by Russia’s VTB Group as bids come in for Essar Steel India, the distressed steel maker being sold under the country’s insolvency process, according to informed sources.

ArcelorMittal is competing with a consortium led by Russia’s VTB Group as two bids came in for Essar Steel India, the steel maker being sold under the country’s insolvency process.

An Indian unit of ArcelorMittal, the world’s biggest producer of the alloy, submitted an offer, it confirmed on Monday.

Sources said ArcelorMittal was planning a joint offer with Nippon Steel & Sumitomo Metal. Essar Steel could fetch at least $6bn, the sources said, asking not to be identified because the information is private.

Essar Steel received only two bids by the Monday deadline, after domestic rival Tata Steel decided against pursuing an offer, according to the sources.

A new Indian bankruptcy law designed to clear out distressed companies has set off a contest for more than $26bn of steel assets, spurring interest from foreign and domestic metals giants.

Essar Steel has been hurt by weak demand and reduced gas supply, which affected production. The company was owned by billionaire brothers Shashi and Ravi Ruia before being brought under the insolvency resolution process in August.

The VTB consortium planned to bid through a Mauritius-based investment vehicle, Numetal, in which the Russian financial group would be the largest shareholder, the sources said, adding that the investor group is also backed by Ravi Ruia’s son, Rewant Ruia.