Vulcan Steel seeks $2.5 billion funding for Oman Project

27 Jun 2023 , 02:29 PM

Vulcan Steel, a privately held company owned by industrialist Naveen Jindal, is in discussions with multiple export credit agencies (ECAs) to secure $2.5 billion in funding for its upcoming green steel plant in Oman.

According to the sources, the plant will be built entirely with funds from non-bank sources. According to an earlier interview with a senior executive from the group, the company plans to invest more than $3 billion in the Duqm-based project.

The ECAs will contribute to the purchase of capital goods for the plant, which will be largely imported from abroad in Oman. ECAs typically fund the purchases of foreign buyers from their home country, thereby encouraging export.

The plant, which is expected to be operational by 2027, will have a manufacturing capacity of 5 million tonnes per year. It will be a subsidiary of Jindal Shadeed Iron and Steel LLC, which Vulcan Steel purchased in 2020.

The project was undertaken with a focus on European steel markets, as the continent prefers low-emission raw materials to meet its decarbonisation targets. Vulcan Steel is betting on green steel’s demand potential because it is regarded as one of the leading solutions for manufacturing companies looking to reduce their carbon footprint.

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

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