JSW Steel, ArcelorMittal keen on acquiring Vedanta's mines, steel business in East: Report

JSW Steel, ArcelorMittal and a few private equity funds are reportedly interested in bidding for the iron ore mines and a steel plant of ESL Steel, which is part of Vedanta Ltd, controlled by Anil Agarwal.

While the Vedanta group has indicated an enterprise valuation of Rs 10,000 crore for these assets, potential buyers are seeking a reduced valuation, a report in Business Standard said. Vedanta had acquired the erstwhile Electrosteel Steels’ plant having a production capacity of 2.5 million tonnes at the integrated greenfield steel plant near Siyaljori village, in the Bokaro district of Jharkhand.

The integrated facility includes a sinter plant, coke oven, blast furnace, basic oxygen furnace, billet caster, wire rod mill, bar mill, DI pipes plant, and power plant. ESL was originally incorporated in 2006 as a public limited company.

In June 2018, Vedanta had initially acquired the plant from Electrosteel Steels under the Insolvency and Bankruptcy Code. But with debt concerns around the company, Vedanta Resources is 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.

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

Earlier, JSW Steel had expressed interest, specifically in the iron ore mines owned by Vedanta in Karnataka and Goa.

On the other hand, the acquisition of Vedanta’s steel plant in Jharkhand will give ArcelorMittal a strategic foothold in Eastern India because of proximity to essential raw materials.

Demerger plans

Last month, Vedanta shared its plan to create independent verticals through the demerger of underlying companies, mainly its metals, power, aluminium, and oil and gas businesses to unlock potential value.

As per the plan, the company will be splitting the company in six separate listed entities:

• Vedanta Aluminium
• Vedanta Oil & Gas
• Vedanta Power
• Vedanta Steel and Ferrous Materials
• Vedanta Base Metals
• Vedanta Limited

Shareholders of Vedanta Ltd. will get one share in each of the five newly listed entities, for every one share they hold in the currently listed entity.

On Wednesday, Vedanta Ltd. incorporated its base metals unit Vedanta Base Metals Ltd. with an authorised share capital of Rs 1 lakh, the company said in an exchange filing.

Vedanta Base Metals will have a diversified portfolio of international base metal assets including Tuticorin, Fujairah Gold, Silvassa and VZL. The unit contributed 5% to the company's consolidated operating profit in financial year 2023.

Speaking about the demerger, Agarwal on Thursday posted on X: "In my journey of building Vedanta, I have been blessed to have the most fantastic shareholders. Aap sab mere parivar ke sadasya hain. Like you have always stood by me, I will always be with you. The thought behind the demerger of Vedanta into six units is driven by aspiration, not just mine but also yours, to see faster growth and even higher returns. I will not rest until the true value of each unit is unlocked. Each will become bigger than the parent. That's the power of 'pure play.' I have no doubt , aapke saath se, hum honge kamyaab."

Shares of Vedanta Ltd were trading at Rs 226.90, down by 0.35 per cent.