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In its second overseas takeover within three days, Ruias-owned Essar Global on Wednesday signed an agreement to acquire iron ore-rich Minnesota Steel LLC in the United States for an estimated $80-90 million (Rs 350-375 crore).
Essar Global Limited, through its subsidiary Essar Steel Holdings, inked the pact with Minnesota Steel and announced an investment of $1.65 billion to set up a 2.5 million tonnes integrated steel firm.
Although the deal value was not disclosed, sources said the acquisition amount ranges between $80-90 million.
The US acquisition comes barely three days after Essar Global announced its acquisition Canadian firm Algoma Steel for $1.58 billion (Rs 6,900 crore).
Minnesota has iron ore reserves of more than 1.4 billion tonnes, the two companies said in a joint statement.
"By developing this significant ore resource, Minnesota has the opportunity to be one of the low cost producers of steel in the world," Essar Global chairman Shashi Ruia said.
Essar's takeover follows compatriot Tata Steel's buyout of Anglo-Dutch firm Corus Group Plc for $12.9 billion and comes amid a consolidation in the global steel industry.
NRI tycoon L N Mittal had last year acquired Arcelor to create the world's biggest steel empire Arcelor Mittal.
The companies said steel plant would be built in stages, with the first phase expected to be commissioned in 2009 and produce up to 1.5 million tonnes of thick steel slab per year.
"Our investment in Minnesota Steel is exciting as it gives us a cornerstone in North American market. From this, we will further expand our global steel business," Ruia said.
Essar Global, the overseas investment arm of Essar Group, said Minnesota and Algoma Steel together would form the corner stone for the company's North American strategy in line with its plan to build a global footprint.
The Indian conglomerate has interests in diversified areas ranging from steel to shipping, oil and gas, telecom and power. Besides buying overseas assets, Essar Steel Holdings is expanding its steel plant in India to 8.5 million tonnes per year by 2009 from 4.6 million tonnes at present.
The company also operates a cold rolling complex in Indonesia and has finalised plans to set up an integrated steel plant for flat products in Trinidad and Tobago. It is also investing $527 million for setting up a hot strip mill in Vietnam.
Minnesota's proposed steel plant would include iron ore mining, ore processing and steel-making at a single site. The US company has already secured capacity to transport natural gas from Canada for the project.