Essar Stelco bid shortlisted

Essar Global, the overseas investment arm of the Essar Group, has been shortlisted along with two other bidders for the acquisition of North American steel maker Stelco. The other two companies in the race are Metinvest of Ukraine and Russian steel maker OAO Severstal.

Sources close to the development said senior executives of these three companies recently visited the facilities of Stelco, which was put on the block last month. Going by its stock price, the acquisition of Stelco could cost over $700 million (Rs 2,800 crore).

When contacted, an Essar Group spokesperson said: "The Group keeps looking for growth opportunities across the globe. However, as a matter of policy, we don't comment on any particular transaction."

Stelco is one of the largest Canadian steel producers with 4,300-odd employees and an estimated 16 per cent share of the domestic market. It has two steel making units with 4.8 million tonnes of raw steel production capacity, four steel processing facilities and ownership in three iron ore mines which have combined reserves of 480 million tonnes for a reserve life of over 25 years.

Industry experts said a Stelco acquisition would help the Essar Group cater to the North American automotive industry better as more than half of Stelco's shipments are meant for the automotive industry. An auto capacity of nearly 3 million vehicles a year is located in the vicinity of Stelco units.

A successful acquisition of Stelco would mean the third purchase by the Essar Group. It recently acquired Canadian steel maker Algoma, which supplies sheets to US car makers, including General Motors and Ford, in an all-cash deal of $1.6 billion (Rs 6,400 crore).

It also purchased Minnesota Steel, a US-based privately held company, for Rs 200 crore. The group is also investing $1.65 billion to develop the foreign company's iron ore reserves of 1.4 billion tonne.