JSW Steel, ArcelorMittal set sights on Vedanta mines, steel business in East

Vedanta chairman Anil Agarwal.

JSW Steel and ArcelorMittal feature among the likely bidders for the iron ore mines and a steel plant of ESL Steel, which is a part of mining magnate Anil Agarwal-owned Vedanta Ltd. The development indicates potential acquisition opportunities and strategic investments in the iron and steel industry as various entities explore options to expand their portfolios and operations.

Vedanta Group has set an enterprise valuation of Rs 10,000 crore for these assets. However, potential buyers are aiming for a reduced valuation, indicating negotiations and considerations for the final acquisition price, the Business Standard reported on October 12.

Vedanta had initially acquired the plant from Electrosteel Steels in June 2018 under the Insolvency and Bankruptcy Code, marking its entry into the sector. But, as debt concerns escalated, the LSE-listed company started looking out for the possibility of selling the asset, triggering discussions on its valuation. The final acquisition price will likely be determined through negotiations between Vedanta and the potential buyers of the ESL Steel assets.

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Moneycontrol could not verify the report independently.

“Both the assets could be sold separately, and the combined ask price is around Rs 10,000 crore. The offers, however, are expected in the range of Rs 7,500 crore to Rs 8,000 crore,” the financial daily said, citing a source.

A spokesperson for Vedanta said the company “continues to review its strategic priorities in the normal course of its capital allocation discussions”.

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In this regard, the company is conducting a strategic review of its steel and steel-making raw materials businesses. The review includes a wide array of options aimed at maximising the stakeholder value, including but not limited to, a potential strategic sale of some or all the steel businesses, the publication quoted the spokesperson as saying. This statement highlights the company's proactive approach in exploring options to optimise value for its stakeholders.

JSW Steel has expressed interest, specifically in the iron ore mines owned by Vedanta in Karnataka and Goa. Joint Managing Director Jayant Acharya had earlier mentioned this interest, signalling the company's focus on acquiring these strategic assets in the region.

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The acquisition of Vedanta’s steel plant in Jharkhand will also give ArcelorMittal a strategic foothold in Eastern India because of proximity to essential raw materials. Plus, the move aligns with ArcelorMittal's strategy and aims to enhance its presence and operations in the country, especially in key industrial regions.

The potential sale of these steel assets is critical for the Vedanta Group as it seeks to raise cash to assist its parent company, Vedanta Resources, in repaying a significant debt of $1 billion due by January.