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ArcelorMittal and the Ruias of Essar are likely to resolve their dispute over a captive port in Hazira and adjoining power assets with both parties making a “verbal commitment” to settle the matter, said people aware of the development, possibly bringing three years of acrimony to a close.

An Essar Group spokesperson said: “As a policy, we don’t comment on market speculation.” A spokesperson for AM/NS declined to comment on the matter as it’s sub judice.

A senior AM/NS executive who didn’t want to be identified said talks are progressing. “They have reached a verbal agreement,” the person said. “It will be an all-inclusive deal involving the entire energy and logistics infrastructure – power plants, transmission lines and the port-captive to the Hazira steel plant.”

The Ruias are seeking about $2.5 billion for the assets, said the people cited above. The final number, closer to $2 billion, will be largely to pay off the bank debt on these assets, estimated at around $3 billion. A final decision is expected soon.

Legal Dispute for last 3 Years

The Hazira steel plant is the country’s largest single-location flat steel plant. It was set up by Essar at a cost of more than Rs30,000 crore and was acquired by Arcelor Mittal in bankruptcy proceedings in 2018-19.

The complex also houses a 30 million tonne per annum (MTPA), all-weather, deep-draft, dry bulk port and a 515 MW natural gas-operated power plant. The terminal operates four berths with a total quay length of 1,150 metres at an operational draft of 14 metres. The port has a take-or-pay contract with the steel plant.


Essar Steel India (ESI) had also set up a captive jetty adjoining the steel plant. In 2007, the port and jetty were leased to Essar Bulk Terminal Ltd (ETBL) by the Gujarat Maritime Board with licences to administer, maintain and use the facilities. Essar Steel was put under the insolvency process in 2018. But ETBL and the gas-fired plant were kept out of the resolution plan despite being critical to run and scale up the steel operations besides ramping up raw material and power supplies. Both are located in the same coastal complex.

For the last three years, the two groups have had a running dispute in the Gujarat High Court relating to the transfer of ownership after the change of control from Essar to AM/NS as well as depth of the port. AM/NS wanted the depth to be increased by two metres to 12 metres, to enable larger ships to anchor, which was met with resistance from the Ruia group. This dispute may end if the ownership of the port changes hands.

The Essar Group, over five years, has deleveraged its balance sheet by selling assets, reducing its group debt by Rs 1.8 lakh crore.

ETBL and the power plant, located in the same coastal complex, were kept out of the Essar Steel resolution plan but are critical to its operations.

ArcelorMittal, through its Indian venture ArcelorMittal Nippon Steel (AM/NS), moved the Gujarat High Court in 2020, asking that the bulk terminal at Hazira be handed over.


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