Oman - Vulcan Steel, a company owned by leading Indian industrialist Naveen Jindal, is in talks with multiple export credit agencies (ECAs) from across the globe to raise $2.5 billion in funds for its new green steel facility in Oman, said Indian media reports.

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, which Vulcan Steel had acquired in 2020, reported The Economic Times, citing senior sources.

Vulcan Steel had then paid an enterprise value of $1 billion to Jindal Steel and Power (JSPL) for acquiring the steel firm. 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, it stated.

Vulcan Steel said these 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, it stated.

The plant will be built entirely with funds from non-bank sources, it added.

In all, the company plans to invest more than $3 billion in the project to be set up in the Omani port city of Duqm, said the ET report, citing a company official.

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, said the report.

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 added.

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