The acquisition bolsters AM/NS India’s strategy to integrate the Company’s manufacturing and logistics chain for seamless connectivity and supply chain security for movement of raw materials and finished goods.
ArcelorMittal Nippon Steel India Ltd (AM/NS India) will acquire a 16 million tonne (mt) capacity iron terminal at Visakhapatnam Port from a unit of Essar Group for some Rs800-1,000 crore as the joint venture steel maker snaps up port assets that are intrinsic to the steel plant at Hazira which it acquired under India’s bankruptcy law.
Essar Vizag Terminals clinched the 30-year deal in an auction by placing the highest revenue share of 31.05 percent with the port authority.
“The Board of Visakhapatnam Port Authority has cleared the proposal submitted by Essar Vizag Terminals to sell the facility to AM/NS India subject to security clearance from the Central government,” a Visakhapatnam Port Authority official said. Security clearance from the Centre is mandated for private cargo contracts and mergers and acquisitions at major ports or those run by the Union Government.
“The security clearance for the deal is expected within a month,” the official said. “Once it comes, we will issue a no objection certificate to the transaction,” he added.
Essar Vizag Terminals took over the ore handling complex of Visakhapatnam Port in May 2015 by paying an upfront payment of Rs185 crore to the port authority. In addition, it is contractually mandated to pay a revenue share of 31.05 percent annually to the port authority.
The terminal comprises three berths (two outer harbour berths and one inner harbour berth) with a combined capacity of 23 mt.
The mechanized facility at the terminal includes wagon tipplers for receiving cargo by rakes, transferring cargo through conveyor system to 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 facility has dedicated rail connectivity to India’s iron ore mining belt. The all-weather deep draft facility has the capacity to serve the rapidly growing markets of South-East Asia, including China, Japan, and Korea, in addition to coastal movement for the steel industry within India.
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.