AMNS Luxembourg signs $5 bn loan deal with Japanese banks for Indian ops

The loan proceeds would be used to finance the expansion of the plant at Hazira, Gujarat, from nine million tonnes (mt) to 15 mt

The world’s second largest steelmaker, ArcelorMittal, announced on Friday that AMNS Luxembourg Holding SA, the parent company of ArcelorMittal Nippon Steel India (AM/NS India), has entered into a $5 billion loan agreement with a consortium of Japanese banks to finance the company's expansion plans in India.

The agreement is with the Japan Bank for International Cooperation (JBIC), MUFG Bank, Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Mizuho Bank and Mizuho Bank Europe N.V.

AM/NS India, a 60:40 joint venture between ArcelorMittal and Nippon Steel Corporation, has embarked on a major capex drive. The proceeds from the JBIC co-financing loan would be used to finance the expansion of the plant at Hazira, Gujarat, from nine million tonnes (mt) to 15 mt, a statement from ArcelorMittal said.

In addition to the primary steelmaking capacity expansion, the project includes the development of downstream rolling and finishing facilities that will enhance AM/NS India’s ability to produce value-added steels for sectors such as defence, automotive and infrastructure.

According to ArcelorMittal’s investor presentation at the time of announcing its FY22 results in February (the company follows a January-December fiscal year), the total approved investment plan for AM/NS India was about $7.4 billion. It includes $0.8 billion for ongoing debottlenecking, $1 billion for downstream and $5.6 for upstream expansion at Hazira.

ArcelorMittal said in a statement on Friday that the expansion project, which started last October, upon receipt of environment clearance, would create more than 60,000 jobs.

In a separate statement, Nippon Steel, said, the steel market in India was expected to grow steadily with economic and population growth, while the domestic production of steel, including upstream processes, is progressing under the government of India’s “Make in India” policy.

“AM/NS India was the fifth largest producer of crude steel in India, and through the initiatives to expand its capacity, Nippon Steel aims to capture the growing demand in the Indian market and secure its market presence,” Nippon said.

ArcelorMittal acquired Essar Steel (renamed AM/NS India) jointly with Nippon Steel in December 2019 in a Rs 42,000 crore deal under India’s insolvency law. The move gave the global steelmakers a foothold in the growing Indian market and placed it among the top producers of the alloy.

The expansion of AM/NS India comes at a time when steel companies have lined up capacity addition plans totalling 35-40 mt, expected to be commissioned by FY26.

AM/NS India’s plans include a combination of brownfield and greenfield projects. Apart from the 9 to 15 mt upstream expansion at Hazira – expected to be completed by early 2026 –a 12 mt greenfield plant in Odisha is under consideration. Also, capacity at Hazira can be expanded further to 20 mt.

AMNS Luxembourg signs $5 billion loan agreement with a consortium of Japanese banks

Banks involved are Japan Bank for International Cooperation (JBIC), MUFG Bank, Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Mizuho Bank and Mizuho Bank Europe N.V.

The loan proceeds will be used to finance AM/NS India’s expansion plan; it entails expanding capacity at Hazira from 9 to 15 mt and development of downstream and finishing facilities

Investment in expansion pegged at $7.4 billion

IN STEEL COMMAND 

• Investment in expansion pegged at $7.4 bn 
• To expand capacity at Hazira from 9 to 15 mt   
• Develop downstream and finish facilities 
• $800 mn to be used for ongoing debottlenecking 
• $1 bn to be set aside for downstream  
• $5.6 bn to be used for upstream expansion at Hazira plant 
• Expansion to create more than 60,000 jobs 
• Loans to be raised from Japan Bank for International Cooperation, MUFG Bank, Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Mizuho Bank and Mizuho Bank Europe N V too