Trump teams up for massive $15 billion deal with Indian conglomerate that once went bankrupt

The announcement comes weeks before the November 3 US midterm elections. Iowa has several competitive congressional contests this year, including a high-profile Senate race.

New Delhi: With the Ruia family set to return to large-scale steelmaking nearly a decade after Essar Steel entered insolvency proceedings in India, US President Donald Trump has announced plans for a $15 billion steel complex in Iowa being developed by India’s Essar Group.

The announcement was made at the White House in the presence of Essar Group co-founder Ravi Ruia and Mesabi Metallics chairman Rewant Ruia. The project will be developed by Mesabi Metallics, an Essar-backed company, and will be integrated with the group’s iron ore mine in Minnesota.

The total US investment is expected to reach $18 billion, including around $3 billion being spent on the Minnesota mine and pelletising plant. The Iowa steel plant will account for $15 billion of the investment.

Trump described it as the "largest steel plant in American history". The first phase is expected to produce 7.5 million tonnes of steel a year. The plant’s capacity is expected to later rise to 10 million tonnes. Steel production is expected to start in 2030.

The project could create at least 1,750 permanent jobs and support up to 6,000 construction jobs in its first phase, according to the White House. Essar estimates that construction and the first 10 years of operations could generate about $95 billion in economic output.

From insolvency to a new plant

The announcement is important for Essar because the Ruia family lost control of its flagship steel business in India after a prolonged insolvency process.

Essar Steel India entered insolvency proceedings in 2017 after accumulating heavy debt. The company had an annual steelmaking capacity of about 10 million tonnes and had been one of the country’s major steel producers.

Creditors eventually approved ArcelorMittal's bid for Essar Steel. The Luxembourg-based steelmaker completed the acquisition in December 2019 in partnership with Japan's Nippon Steel. The business was later renamed ArcelorMittal Nippon Steel India or AM/NS India.

The new Iowa project will bring Essar back into large-scale steel production through its US operations. Financial Express described the development as Essar's return to steel nearly a decade after the insolvency process began.

Its expansion in India had earlier taken the group into steel, oil, power, shipping, telecom, ports and infrastructure. The rapid expansion also brought a heavy debt burden.

The group sold Essar Oil in 2017 in a $12.9 billion deal involving Rosneft, Trafigura and United Capital Partners. The refinery business later became Nayara Energy. Rosneft owns 49 per cent of Nayara Energy, while United Capital Partners also holds a 49 per cent stake.

Ruia backs Modi’s India-US economic vision

He said in a statement, “This investment marks a new chapter in Essar’s global journey and carries forward the vision of my brother, Shashi Ruia, to build world-class businesses with a global footprint.”

He added, "With over three decades of experience across the steel value chain, Essar is proud to bring that expertise to this landmark investment."

Ruia also referred to Prime Minister Narendra Modi's vision for India-US economic ties. He said that the group wanted to contribute through "long-term investment, industrial growth and job creation".

The Iowa project will use iron ore from Mesabi Metallics' mine in Nashwauk, Minnesota. The company says the Minnesota operation is the first new iron ore mine opened in the United States in 50 years. Essar has invested more than $2.5 billion in the Minnesota operation, while the US Export-Import Bank has committed $10 billion in financing for its expansion, according to Reuters.

The plan is built around a mine-to-mill supply chain. Iron ore will be mined and processed in Minnesota before being used at the Iowa steel complex. The facility will use direct reduced iron and electric arc furnace technology.

Essar says the process will allow the company to produce steel using domestic raw materials and modern steelmaking technology.

Trump's steel tariffs and Iowa plant

Trump has cited his tariff policy while announcing the investment. His administration has imposed high tariffs on imported steel to boost domestic production.

At the White House announcement, he said, "Our steel industry is roaring back to life."

Commerce Secretary Howard Lutnick also cited the administration's steel tariffs while speaking about the project, saying, "These are your 232 tariffs, the steel tariffs at work."

The announcement comes weeks before the November 3 US midterm elections. Iowa has several competitive congressional contests this year, including a high-profile Senate race. Reuters reported that the timing gives Trump a major manufacturing investment to present as part of his economic record.

Iowa Governor Kim Reynolds, Senator Joni Ernst and members of Iowa's congressional delegation were present at the White House event along with Trump, Ruia and senior US officials.

Essar's expanding US investment

The Iowa steel project is part of a much larger US investment programme by Essar. The group is combining its Minnesota mining operation with the new Iowa steel complex to create an integrated production chain.

The company says the completed project will produce 100 per cent American steel. The iron ore will be mined in Minnesota and the steel will be produced in Iowa. Mesabi Metallics expects the Iowa facility to employ at least 1,750 people once operational. More than 1,500 construction workers are working at the Minnesota mine, with more than 200 full-time employees there, according to Essar.

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