Nippon Steel, ArcelorMittal eye huge Indian infrastructure projects after Essar takeover
By Kaoruko Naruoka
NEW DELHI, NNA – Steel giants Nippon Steel Corp. and ArcelorMittal S.A. are poised to cater to the surging steel demand by the infrastructure sector in India following their takeover of Essar Steel India Ltd.
The two global producers completed the buyout of the local steel maker for 500 billion rupees ($6.7 billion) in December. It was renamed ArcelorMittal Nippon Steel India Pvt. Ltd. (AMNS) with Nippon Steel owning a 40-percent stake and ArcelorMittal taking 60 percent in the joint venture.
On Tuesday, the partners announced that their joint venture had signed a $5.146 billion loan agreement with Japan Bank for International Cooperation and four other Japanese banks to refinance their acquisition.
Increased production with the takeover would help the Japanese steel producer serve infrastructure construction even better over the long term, Hiroshi Ebina, managing director of Nippon Steel India Pvt. Ltd., told NNA in an interview.
The acquired Essar Steel had previously produced steel products amounting to around 6.5 million tons in the past financial year ending in March 2019, he said. It posted 260.3 billion rupees in sales in the year before that, according to Nippon Steel, which plans to invest heavily in production expansion.
“We will invest in upstream and bottleneck manufacturing processes to bring the output to 8.5 million tons per year and ramp up further to 12 million to 15 million tons in the long run," said Ebina.
ArcelorMittal Nippon Steel India is capable of churning out a wide variety of products, ranging from hot and cold rolled steel sheets and steel pipes to hot-dip galvanized steel sheet and painted steel plate, according to Ebina.
The joint venture will mainly produce steel products for areas such as civil engineering and road construction. The company will also strive to deliver quality products and stable supplies, he added.
Before the Essar steel takeover, Nippon Steel has been operating 13 group arms in India, supplying cold rolled steel sheets for automobiles and special steel products, which are made by Mahindra Sanyo Special Steel Pvt. Ltd., a joint venture with Mahindra & Mahindra Ltd., major Japanese trading house Mitsui & Co. and Sanyo Special Steel Co., a Nippon Steel subsidiary.
Nippon Steel has estimated the group’s total crude steel output would be 47.3 million tons in the current financial year ending this March, down 1.1 percent from the previous year. This excludes the output of Essar Steel, according to its statement released in February.
The administration of Prime Minister Narendra Modi had pledged to spend 100 trillion rupees in infrastructure developments over the next five years.
The South Asian country wants to increase its crude steel output from the current 140 million tons per year to 300 million tons in 2030. It expects local steel demand to jump from 100 million tons currently to 230 million tons by then.
Currently, India, which is Asia’s third largest economy, ranks second in steel production globally after China, and third in consumption after China and the United States, according to the World Steel Association.