Tata Steel taps Adani’s Hazira Port
Tata Steel Ltd, a contender for Essar Steel Ltd’s assets, has secured an informal commitment from the Adani group for use of its port in Hazira, Gujarat, if the Tata group company wins the bid for the bankrupt steel maker’s assets located in the vicinity, two people with direct knowledge of the matter said.
Tata Steel’s move is part of a contingency plan it has drawn should the current port and power infrastructure being used by Essar Steel be unavailable to the new owner of the company, the people cited above said on condition of anonymity.
“Essar Steel currently uses the facilities of Essar Ports and Essar Power Ltd for raw materials and power supply,” said one of the two people. “There is concern among a section of the potential bidders whether Essar group will continue to provide port and power facilities on the same terms if the current promoters, the Ruia family, loses control of Essar Steel which is currently under bankruptcy proceedings”.
Essar Steel Hazira is the country’s largest single-location flat steel plant. The complex also houses a 30 million tonne per annum (mtpa), all-weather, deep draft, dry bulk port and a 515 megawatt natural gas-operated power plant. Built at a total cost of more than Rs30,000 crore, Essar Steel Hazira has a steel-making capacity of 10 mtpa.
While an email sent to Tata Steel remained unanswered till the time of going to press, an Adani group spokesperson declined to comment.
The second person cited above said that the Adani group has given its informal consent to Tata Steel for constructing an additional port terminal exclusively for Essar Steel if there is a change of control in the company and the current facilities are no longer available.
At a distance of approximately 6km from the Essar Steel plant, Adani Hazira Port Pvt. Ltd is located on the western side of the Hazira peninsula and handles all types of cargo including bulk, break-bulk, bulk liquid chemicals, petroleum products and edible oil, containers, automotives and crude.
Responding to a query, a spokesperson for Satish Kumar Gupta, the interim resolution professional from Alvarez and Marsal (A&M) appointed for Essar Steel, said: “As a policy, A&M does not comment on client or potential client engagements.”
While an Essar group spokesperson did not respond to queries, a senior group official who did not wish to be named said: “The current agreements between Essar Steel with Essar Port and Power are arms-length contracts and a potential change of ownership of Essar Steel should have no bearing on the terms of contract.”