Essar Steel Holdings, which also has presence in the Middle East, Asia and the US, had acquired Canada-based Algoma Steel for $1.85-billion last June. Post-acquisition, the company invested Rs 800 crore in upgrading the entire facility and enhancing the capacity of steel plant located at Sault Ste. Marie to 2.8 million tonnes per annum (mtpa) this year from 2.1 mtpa last year.

Looking at the growing demand for flat steel products in the Canadian market, primarily in the construction and general engineering sector, the company would make additional investments in scaling up the capacity to 3.6 mtpa over the next one year. For this, it has commissioned a blast furnace, which had been idle since 1995. So far, the company was dependant on a blast furnace that has 2.5 mtpa capacity of liquid iron.

“Majority of the expansion would be funded through self-generated cash. Continued strong cash flow will enable the company to further reduce debt while maintaining an active capital investment program, said Essar Steel Algoma vice-president (finance) Sandeep Dixit. Globally, Essar is targeting 20-25 mtpa steel capacity by 2012 as against 7.4 mtpa currently. At present, Essar Steel Algoma purchases iron ore and coal for steel making from the open market.