ArcelorMittal (MT)-Nippon Steel Wrap Up Essar Steel Buyout
Zacks Investment Research | Dec 16, 2019 08:48PM ET
ArcelorMittal (NYSE:MT) has announced that the acquisition of Essar Steel India Limited (“ESIL”) has been completed. Per the terms of the buyout, the company formed a joint venture (JV) with Nippon Steel Corporation — ArcelorMittal Nippon Steel India Limited (AM/NS India) — through which the parties will own and operate ESIL. Notably, ArcelorMittal holds 60% of the newly formed JV and Nippon Steel owns the remaining 40%.
AM/NS India is the largest steel company in western India. The current level of annual crude steel production is 7.5 million tons per year. The JV also has iron ore pellet facilities in the east of India with annual capacity of 14 million tons.
ArcelorMittal has also stated that AM/NS India intends to boost finished steel shipments to 8.5 million tons over the medium term. This is likely to be achieved by initially completing the current capital expenditure projects along with infusing expertise and through commissioning of additional assets. The JV plans to improve product grades and quality to realize healthier margins.
Over the long term, the company aspires to boost finished steel shipments between 12 million and 15 million tons by adding new iron and steelmaking assets. This will enable AM/NS India to play an active role and benefit from the expected growth in the Indian steel industry.
ArcelorMittal’s shares have lost 15.4% in the past year compared with 5.8% decline of the Zacks Investment Research
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