Essar to acquire US steel firm

NEW DELHI: In its second overseas takeover within three days, Ruias-owned Essar Global today signed an agreement to acquire iron ore-rich Minnesota Steel LLC in the US for an estimated 80-90 million dollars (Rs 350-375 crore).

Essar Global Ltd through its subsidiary Essar Steel Holdings inked the pact with Minnesota Steel and announced an investment of 1.65 billion dollars to set up a 2.5 million tonnes integrated steel firm.

Although the deal value was not disclosed, sources said the acquisition amount ranges between 80-90 million dollars.

The US acquisition comes barely three days after Essar Global announced buying Canadian firm Algoma Steel for 1.58 billion dollars (Rs 6,900 crore).

Minnesota has iron ore reserves of more than 1.4 billion tonnes, the two companies said in a joint statement.

"By developing this significant ore resource, Minnesota has the opportunity to be one of the low cost producers of steel in the world," Essar Global chairman Shashi Ruia said.

Essar's takeover follows compatriot Tata Steel's buyout of Anglo-Dutch firm Corus Group Plc for 12.9 billion dollars and comes amid a consolidation in the global steel industry. NRI tycoon L N Mittal had last year acquired Arcelor to create the world's biggest steel empire Arcelor Mittal.

The companies said steel plant would be built in stages, with the first phase expected to be commissioned in 2009 and produce up to 1.5 million tonnes of thick steel slab per year.

"Our investment in Minnesota Steel is exciting as it gives us a cornerstone in north American market. From this, we will further expand our global steel business," Ruia said.