Empire in steel: How Naveen Jindal is building a private steel behemoth overseas

Over the past five years, Jindal has built an end-to-end steel business with assets across Europe, the Middle East and Africa. This includes mines in Mozambique and Cameroon, steel units in Oman and a downstream value-added steel facility in the Czech Republic. His next target: Italy’s Acciaierie d’Italia, the largest steel plant in Europe formerly known as Ilva.

While 10 companies have bid for various company assets, only three have bid for the entire operations. Privately owned Jindal Steel (International), one of the three, is among the favourites to win the bid, an executive familiar with the plans said. If all goes to plan, Jindal, 54, will helm a 14-million-tonnes-per-annum steel empire through privately-owned companies by the end of 2028, Mint calculations showed. By then, publicly-listed JSPL is expected to have a steelmaking capacity upwards of 16 mtpa.

Both businesses together would make Naveen Jindal one of the biggest steel czars in the world alongside Lakshmi Mittal of ArcelorMittal and his half-brother Sajjan Jindal, who heads JSW Steel, the largest domestic steelmaker in India.

Also read | Naveen Jindal eyes Africa with steel mill, power plant

Detailed queries emailed to a spokesperson of the Jindal group on Tuesday did not elicit a response by press time Sunday.

Substantial assets

Vulcan Minerals, a private company owned by Naveen Jindal, operates a profitable coal mine in Mozambique, which was acquired from Brazil’s Vale in 2021 in a deal valued at $270 million.

Also in Africa, Jindal’s private companies own an iron ore mine in Cameroon, which was acquired from Australia’s Legend Mining in 2014, but had failed to take off. Now, the company has restarted efforts to operationalize the mine, with plans of setting up a beneficiation plant, a pellet plant and a pipeline to transport the raw material to the Port of Kribi, as per local media reports. It plans to ship iron ore from Cameroon to Oman to be converted into steel, as well as surplus direct-reduced iron (DRI), an intermediate in steelmaking.

In Oman, Vulcan Steel, another privately held Jindal company, purchased Jindal Shadeed Iron & Steel from listed JSPL in two tranches in 2020 and 2021 for an enterprise value of about $1 billion. It operates a 2 mtpa integrated steel plant at Sohar in Oman. Vulcan Green Steel, another private company, is constructing a 5 mtpa green steel plant at Oman’s Duqm in two phases, the second of which will be operational by end of 2028, said the executive cited above. Initially, the plant will be served by excess DRI produced in Sohar, he said.

Also read | Jindal Steel earnings to get shipshape with better product mix, volume boost

In December, Jindal’s private venture acquired Vítkovice Steel in the Czech Republic, which owns a 750,000 tonnes per annum downstream steel processing mill. The mill converts crude steel into finished sheets which are then sold in the European market.

In Italy, Jindal is eyeing Acciaierie d’Italia, based in the city of Taranto. In its heydays, the company used to produce 12 mtpa of steel, but is currently operating at about 2.5-3 mtpa capacity after facing financial difficulties. It was acquired by ArcelorMittal in 2017, but was soon returned to the Italian state in 2020 after disagreements with the government. Jindal Steel (International) has proposed to invest €2 billion in this plant to transition it from blast furnace-based steelmaking to less-polluting electric arc furnaces, as per local media reports in Italy. The company estimates that the plant can be ramped up to 7 mtpa capacity, the executive said.

“Our project aims to transform the former Ilva into one of the leading and largest producers of low-carbon steel in Europe, through the implementation of an integrated ‘mine-to-metal’ strategy,” Narendra Kumar Misra, director of European Operations at Jindal Steel (International), told La Gazzetta del Mezzogiorno last month.

In December, Jindal’s private venture acquired Vítkovice Steel in the Czech Republic, which owns a 750,000 tonnes per annum downstream steel processing mill.

“In our industrial plan, we envisage a complete upstream integration of the Taranto plant, using our mines in Cameroon, Mozambique and India. This will ensure a direct supply of raw materials, improving cost efficiency and sustainability of the production process, while strengthening the global supply chain,” he said.

While listed JSPL has exposure to India – the world’s largest growing steel market – Jindal’s private business will cater to Europe and the Middle East with low-emission steel, which is highly sought after in these markets.

Also read | Jindal Steel eyes ₹15,000 cr in one of the largest corporate loan deals

“Europe is consuming 140-150 million tonnes of steel annually, similar to India. So, there is a lot of potential there. Middle East is also a fast-growing market,” said the executive cited above.

While many of the assets are under construction or contingent on winning a competitive bid, as in the case of the Italian unit, when completed, these are expected to have an annual crude steel manufacturing capacity of 14 mtpa – including 7 mtpa in Italy, 5 mtpa in Duqm and 2 mtpa in Sohra. This compares with JSPL’s annual crude steel capacity of 9.6 mtpa at the end of FY24. To be sure, JSPL is also expanding and is projected to reach annual crude steel manufacturing capacity of 15.9 mtpa by the end of FY26, as per the company’s latest annual report.

When the promoter of a listed company starts a competing private business, the interests of minority shareholders may be jeopardized, a corporate governance expert said.

“Promoters owning companies, in India or abroad, which are in the same or allied line of business as the listed company, are doing a disservice to the listed company and the minority shareholders,” said Shriram Subramanian, a corporate governance expert and the managing director of proxy advisory firm InGovern. “There is a clear conflict of interest as a minority shareholder can never be sure how much management bandwidth and company resources are being utilized by the unlisted companies owned by the promoter,” he said.

The Jindal Group did not respond to queries on these concerns.

“The question should be ‘why not do it as 100% subsidiary of the listed company?’,” he said. “Promoter wealth-building should be through the listed company.”

Also read | Jindal arm plans defence foray, looks to build armoured vehicles

However, it may be argued that by acquiring risky assets through a private company, Jindal is avoiding the risk on the balance sheet of the listed company. JSPL was forced to exit a similar expansion in Bolivia over a decade ago, following disagreements with the local government. Its acquisition of mines in Australia in 2013 also failed to deliver, resulting in years of losses.

JSPL is the fourth-largest maker of steel in India, behind JSW Steel, Tata Steel and state-controlled Steel Authority of India (SAIL). Promoters hold 61.19% in the company, which was worth ₹79,200 crore as of market close on Saturday.

Green energy plans

Beyond steel, Jindal also has ambitious plans in the power sector, with a focus on renewable energy, the executive said.

In 2021, Worldone Pvt. Ltd, another private company of Naveen Jindal, acquired Jindal Power from JSPL at a valuation of ₹7,401 crore. The deal included a cash payment of ₹3,015 crore, plus debt of ₹4,386 crore on the company’s books. Jindal Power has ₹3,400 MW of installed thermal power capacity in Raigad.

Jindal Power is currently under expansion, setting up 2 GW of thermal and 5.4 GW of hydro power projects in India and 650 MW of thermal power assets in Africa.

Jindal Renewables Power Pvt. Ltd, another private company, has plans to set up renewable energy assets in India. It also plans to make green hydrogen in India, which could be exported to Oman to produce green steel.

And read | JSW Group explores expansion into copper, aluminium, has engaged consultants, says top executive