Essar, ArcelorMittal in $2.4b sale pact for infra assets

Mauritius/Mumbai/Emirates Online

In one of the largest post-pandemic M&A deals in India, Essar announced signing definitive agreements with Arcelor Mittal Nippon Steel (AM/NS) for certain Ports and Power infrastructure assets which are primarily captive to Hazira steel plant operations.
The deal also envisages a 50-50 joint venture partnership, for building a 4 MTPA LNG terminal at Hazira, Gujarat, between Essar and ArcelorMittal.
Rewant Ruia, Director, Essar Ports & Terminals Limited, said “With this deal, which yields a multifold return on our investments, Essar Ports & Terminals has unlocked value for all its stakeholders and will continue to focus on building new and modern core infrastructure assets in India and overseas.”
Prashant Ruia, Director, Essar Capital, said “Essar is now repositioned for growth and resurgence. After consolidating our businesses over the last 4 years, we have now entered the next growth phase focused on helping build a sustainable energy future that will impact lives and livelihoods for a greener world.”
With this deal, Essar will conclude its planned asset monetisation programme and complete the debt repayment plan of $25 billion (₹2,00,000 crore) with the Indian banking sector being almost fully repaid. Essar’s aggregate revenues will stand at $15 billion (₹1.2 lakh core) and an AUM (asset under management) of $8 billion (₹64,000 crore) comprising of various assets spread across India and overseas.
These assets under energy sector include a 10 MTPA refinery in the United Kingdom (UK), 15 TCF reserves (including some producing fields) of unconventional hydrocarbons in India & Vietnam and a 1,200 MW Power Plant in India; Infra sector assets include a storage terminal in UK of 3 million m3 capacity and a 20 MTPA Port in India; Metals & Mining sector assets include a major iron ore mine and pellet project in US; technology & services sector assets include global EPC business and IT solutions provider with centers across 30+ countries.
By monetising assets in a planned and strategic manner, that were built with earlier technologies over the last several years, Essar is now poised to reinvest in new assets with the latest, more efficient and ESG-compliant technologies to last the next several decades.
Essar has planned significant investments in its core sectors of energy, infrastructure, metals & mining and technology & services. While ongoing businesses will provide operational stability, our renewed focus will be to transition existing assets to green and invest in sector-transforming clean businesses around the investment themes of decarbonisation and digitisation.
The closing of the M&A deal is subject to completion of certain corporate and regulatory approvals applicable for respective assets.

Future Focus — Sustainable growth
The growth capital from the deal will be used to strengthen Essar’s plans towards ‘Transforming for Tomorrow’, which is driven by the investment themes of decarbonisation, decentralisation and digitisation. In the next couple of years, the company aims to transition its existing assets to green and build sector transforming businesses that would contribute to a clean economy.
Essar Oil UK, through its venture Vertex Hydrogen, Vertex plans to construct two new low carbon hydrogen production units with a planned total investment of £1 billon to deliver hydrogen production hubs. Follow on capacity growth is planned to reach 40% of the UK Government’s target of 10GW of low carbon hydrogen for power, transport, industry and homes by 2030.
Further, a state-of-the-art hydrogen furnace has already been delivered at our Stanlow Refinery, which will soon make the facility transition to much cleaner operations. The company has also collaborated with partners like Progressive Energy and Fulcrum for using state-of-the-art technologies and producing sustainable aviation fuel (made of bio-waste). Essar is also going to invest globally in the manufacturing of green steel.
Similar investments and partnerships are also lined up in India in the fields of renewables, biofuels, green hydrogen and natural gas. Through Ultra Gas & Energy (UGE), Essar is investing in building a Pan-India network of green fuel hubs that will catalyse adoption of clean fuels like LNG, biofuels, hydrogen & electric. The JV with ArcelorMittal for building a LNG terminal at Hazira will provide a boost in the efforts of UGE.
Essar’s plans aim to transition its businesses to net zero emissions, and align with government targets. The company’s efforts are focused towards giving a substantial thrust to the Clean India and Green India vision.