London, United Kingdom and St. Paul, MN: Essar Global Limited, through its wholly owned subsidiary - Essar Steel Holdings Limited, (“Essar”) and Minnesota Steel LLC. (“Minnesota”) today announced that an agreement has been executed to acquire Minnesota Steel LLC; a US based steel company which controls iron ore resources of over 1.4 Billion tonnes.
Minnesota Steel plans to set up an integrated steel plant at an estimated cost of USD 1.65 billion. The steel plant will have an annual capacity of 2.5 million tonnes when completed.
Construction is expected to begin in the third quarter subject to necessary environmental and regulatory approvals.
The steel plant will be built in phases with the first phase expected to go on stream in 2009 and produce up to 1.5 million tonnes of thick steel slab per year.
Minnesota Governor Tim Pawlenty hailed the closing of Minnesota Steel’s strategic partner. “This investment is a tremendous milestone, not only for the company but also for the State,” Governor Pawlenty said. “It moves us much closer to the goal of making steel on the Iron Range.”
Essar Global Chairman, Shashi Ruia said his company is looking forward to expanding operations into North America. “Our investment in Minnesota Steel is exciting as it gives us a cornerstone in the North American market. From this we will further expand our global steel business,” he said.
“By developing this significant iron ore resource Minnesota Steel has the opportunity to be one of the low cost producers of steel in the world” Mr. Ruia added.
“We are very pleased to have Essar as our partner going forward,” said Joseph C. Bennett, chairman of Minnesota Steel. “Essar bring remarkable experience and expertise in Direct Reduced Iron (DRI)/Electric Arc Furnace (EAF) steelmaking.
“Essar has a track record of building projects of this scale in India. In addition, the Company is very environmentally aware,” Mr. Bennett said. “Their commitment to be good stewards of the environment echoes our own.”
John Elmore, president and CEO of Minnesota Steel, highlighted Essar’s commitment to the communities in which it operates. “They have shown in their operations around the world that it’s very important to them to work with the local community and with local individuals, which fits well with our philosophy,” Mr. Elmore said. “They are a strong partner for us and for the state.”
Essar has recently executed an agreement to acquire Algoma Steel, Canada subject to approvals. Together, Minnesota Steel and Algoma Steel form the corner stone for Essar’s North American strategy in line with the global steel vision of having world class low cost assets, with a global footprint.
NOTES TO EDITORS:
About Minnesota Steel
Minnesota Steel is planning to develop, finance and construct a new steel production facility located on the Mesabi iron range in northeast Minnesota. The Company will combine a high-quality orebody with modern and commercially proven technology to develop a vertically integrated steel mill. It will be the first facility in North America to include iron ore mining, ore processing, direct reduction and steelmaking on a single site. For further information, please visit www.minnesotasteel.com.
In addition to the 2,000 construction jobs, Minnesota Steel will create up to 700 full-time jobs and generate 2,100 spin-off jobs.
Earlier this month, the 45-day public comment period on the project’s draft environmental impact statement ended. Once the environmental impact statement is found to have addressed all potential impacts, Federal and State environmental officials can issue permits which are anticipated this summer. Construction will begin thereafter.
In December, the State of Minnesota approved a 7,000-plus acre land swap to ensure Minnesota Steel will have enough acreage for its operation.
In November, Minnesota Steel secured capacity to transport low-cost natural gas from Alberta, Canada, via the Great Lakes Gas Transmission Co.—locking in transport capacity, which is extremely limited, and saving up to 70% on transmission rates.
Essar Global is an international conglomerate operating in six business areas – steel, oil & gas, power, communications, shipping & logistics and construction. It has offices world-wide and employs approximately 20,000 people, including over 3500 persons in the United States. The group has built a portfolio of assets with expected revenues of US$ 10 billion in the year to March 2008. For further information, please visit: www.essar.com
Essar Steel Holdings Limited is an emerging global steel company. It is a fully integrated manufacturer and one of the lowest cost producers of steel globally. Essar Steel Holdings Limited, along with its subsidiaries, operates an integrated steel plant of 4.6 million tones per annum (tpa) in India, which is expected to be increased to an 8.5 million tpa steel complex for flat products by 2009. The complex also comprises a cold rolling plant, down stream facilities and a 5 meter wide plate mill. It is India’s largest exporter of flat steel.
Essar Steel Holdings Limited also operates a cold rolling complex in Indonesia and has now finalized plans to setup an integrated steel plant for flat products in Trinidad and Tobago and a hot strip mill in Vietnam.