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ArcelorMittal Nippon Steel India Ltd (AM/NS India) took control of a 16 million tonne (MT) capacity iron terminal at state-run Visakhapatnam Port from a unit of Essar Group after receiving the long pending security clearance from the Union government for a deal that was announced in 2022.
“AM/NS received security clearance in early March after which we discharged the Essar unit as the promoter/operator of the terminal,” a government source said. The Visakhapatnam Port Authority also collected some ₹54 crores in dues from the Essar unit ahead of allowing change in the terminal’s shareholding, the source added.
The terminal is India’s largest ore handling complex. ArcelorMittal Nippon Steel India Ltd is a joint venture between ArcelorMittal and Nippon Steel, two of the world’s top steelmakers. Though the deal was announced in 2022, the acquiring entity cannot come on board until it receives security clearance from the government per Clause 11.2 of the concession agreement.
A change in shareholding in a public-private-partnership (PPP) terminal at a major port is subject to two conditions. One, the new shareholder must fulfil the eligibility criteria set out by the port authority at the time when the tender was issued for the project. Two, the new stakeholder has to obtain security clearance from the government.
In 2022, AN/NS India acquired some port, power and other logistics and infrastructure assets from the Essar Group for $2.05 billion (about ₹16,500 crores) that are intrinsic to the steel plant at Hazira which it acquired under India’s bankruptcy law.
The deal comprised a 25 MT captive port along with a 270 MW power plant at Hazira, adjacent to AM/NS India’s flagship steel plant, a 16 MT deep draft terminal at Visakhapatnam Port along with an integrated conveyor connected to AM/NS India’s 8 MT iron ore pellet plant in the port city, a 12 MT deep-water jetty at Paradip Port in Odisha along with a dedicated conveyor that handles pellet shipments from AM/NS India’s Paradip pellet plant.
The deal also included a 515 MW gas-brd power plant, along with allied land that can be utilised for AM/NS India’s expansion plans at Hazira. The assets are either captive or allied to AM/NS India’s steelmaking and will strengthen the strategic integration of the Company’s manufacturing and logistics chain and ensure seamless connectivity and supply chain security for movement of raw materials and finished goods between the steel maker’s manufacturing facilities in western, eastern, and southern India, as well as for exports, AM/NS said while announcing the deal.
AM/NS India will be able to realise further synergies from rising throughput at the port assets because of the company’s planned expansion of steel production capacity, it added. Essar Vizag Terminals Ltd (EVTL), a wholly owned unit of Essar Ports Ltd (EPL), acquired the iron ore handling complex at Visakhapatnam Port that was previously run by the state-owned port authority, under a privatisation programme of the government.
Essar Vizag Terminals clinched the 30-year deal in an auction by placing the highest revenue share of 31.05% with the port authority. Essar Vizag Terminals took over the ore handling complex of Visakhapatnam Port in May 2015 by paying an upfront amount of ₹185 crore to the port authority. In addition, it is contractually mandated to pay a revenue share of 31.05% annually to the port authority.
The terminal comprises three berths (two outer harbour berths and one inner harbour berth) with a combined capacity of 16 MT. After taking over the terminal, Essar has invested some ₹800 crores to upgrade the outer harbour berths (OB I & II) and mechanise the inner harbour berth (WQ-I).
The mechanised facility at the terminal includes wagon tipplers for receiving cargo by rakes, transferring cargo through conveyor system to the stackyard having multiple stackers and reclaimers and loading into vessels through ship loaders. The terminal can accommodate super Capesize vessels and has dedicated rail-connectivity with Bacheli and Kirandal mines by which it has the advantage to serve India’s western-sector.
It is also integrated with AM/NS India’s 8 mt iron ore pellet plant in Vizag through a fully mechanized conveying facility with 6.7 km shipping conveyor system. The terminal is strategically located in the Bay of Bengal in close proximity to the iron ore mines located in Chhattisgarh, Southern Odisha and Jharkhand. The facility has dedicated rail connectivity to India’s iron ore mining belt.
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