Vulcan Steel in talks to raise $2.5 billion for Oman project – ET Infra


Vulcan Steel, a privately held company of industrialist Naveen Jindal, is in talks with export credit agencies (ECAs) of multiple countries to close $2.5 billion in funding for its upcoming green steel plant in Oman, two people aware of the discussions told ET.

The plant will be built using funds exclusively from non-bank sources, said the people cited above. In all, the company plans to invest more than $3 billion in the Duqm-based project, a senior executive from the group said in an interview earlier.

The ECAs will help finance the purchase of the capital goods for the plant, which will largely be imported from overseas in Oman. Typically, ECAs fund the purchases of foreign buyers from their home country, thus promoting export.

Expected to be commissioned by 2027, the plant will have a manufacturing capacity of 5 million tonnes per annum. It will be a part of Jindal Shadeed Iron and Steel LLC, which Vulcan Steel acquired in 2020.

The project has been undertaken with a focus on the European steel markets as the continent favours lower emission raw materials to meet its decarbonisation goals. Vulcan Steel is betting on the demand potential for green steel as it is seen as one of the leading solutions for manufacturing companies to cut their carbon footprint.

Queries sent to Jindal Steel and Power (JSPL) remained unanswered as of press time on Monday.

Green steel has the same properties as regular steel but is produced without the use of fossil fuels and, thus, has a minimal carbon footprint. It is not currently available at an industrial scale.

Companies across the world, especially in developed countries, are racing to develop the technology and manufacture green steel at scale. H2 Green Steel, a Swedish firm, is on the path to become the first large scale green steel maker once its under-construction plant becomes operational by 2025.

Vulcan Steel had acquired Jindal Shadeed Iron and Steel LLC from JSPL for an enterprise value of $1 billion. JSPL decided to divest from the asset in 2020 as part of its plan to deleverage its balance sheet and focus on the core steel business in India. JSPL held a 99.9% stake in the Oman asset which it had acquired for $ 464 million in 2010.

Today, Jindal Shadeed runs the first and the only integrated steelworks in Oman. Upon completion, the proposed 5 mtpa green steel plant will be the second integrated steelworks in the gulf country.

  • Published On Jun 27, 2023 at 08:04 AM IST

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