The Essar group's proposed acquisition of Minnesota Steel is likely to be delayed, with the US state authorities taking time in providing the infrastructure required to move the project.
Essar Global, a part of the Essar group, had agreed to buy Minnesota Steel, a US-based privately held company with iron ore reserves of 1.4 billion tonnes, nearly three months ago. It had announced to set up an integrated steel plant with an annual capacity of 2.5 million tonnes with an investment of $1.65 billion (Rs 6,600 crore) by making use of Minnesota Steel's iron ore mines.
Sources in the know of the development said Essar had not finalised the deal in the absence of infrastructure, which included the Minnestota state government's spending on laying a natural gas pipeline and connecting roads with a short-line railroad. The Essar group is yet to get the environmental clearances as well.
John C Elmore, president and chief executive officer, Minnesota Steel, said it was a local political issue and the Essar deal was not contingent on the state's infrastructural support. The project was awaiting environmental clearances, which were expected to come through by August, he added.
Sources in Essar are optimistic on the project. They are hopeful of the state government honouring its commitment.
However, some environmentalists have objected to the project, arguing that mines have the potential to disturb wildlife and contaminate soil and groundwater.
Essar, which produces more than 8 million tonnes of steel annually, has earmarked an investment of over $6 billion (Rs 24,000 crore) over the next five years to increase the steel capacity to 25 million tonnes.
The proposed investment is equal to the group's present turnover. It had announced that the Minnesota Steel acquisition would emerge as the group's cornerstone in the North American markets.
It had also said that the development of Minnesota Steel's iron ore mines would allow Essar to be among the low-cost producers of steel in the world.
