Essar closes deal for 'excellent fit' with Algoma Steel

NEWS RELEASE

ESSAR GROUP

************************* Essar Global completes Minnesota acquisition October 24, 2007

Essar Steel Holdings Limited, part of Essar Global Limited, has, on receipt of regulatory and environmental approvals, completed the acquisition of Minnesota Steel LLC, a U.S.-based steel company with estimated reserves of over 1.4 billion tonnes of iron ore located on the Mesabi iron range in northeast Minnesota.

Minnesota Steel will commence the project activities soon upon achieving the financial closure.

This is one of the largest acquisitions by an Indian group in Minnesota.

Madhu Vuppuluri, president, Essar, North America, said “Together with Minnesota Steel and Algoma Steel, we are optimistic about creating a new and vibrant steel manufacturing capability in North America.”

Commenting on the acquisition, Shashi Ruia, chairman, Essar Global said: “This acquisition follows our purchase of Canada’s Algoma Steel earlier this year. These acquisitions are in line with our strategy of having a geographical spread close to high-value steel markets. as well iron ore sources. Essar’s steel business is now poised to consolidate its position as a low-cost, high-value producer of carbon steel.”

Essar recently acquired Algoma Steel, Canada which has capacity of four million tonnes per annum. E

ssar Steel also plans to set up set up steel making facilities in Trinidad & Tobago, Vietnam and Eastern India, besides enhancing its steel capacity at its plant in Hazira, India, where it is the largest producer of flat steel in western India.

About Minnesota Steel

Minnesota Steel is planning to develop, finance and construct a new steel production facility.

The company will combine a high-quality ore body with modern and commercially proven technology to develop a vertically integrated steel mill.

It will be the first facility in North America to include iron ore mining, ore processing, direct reduction and steelmaking on a single site.

For further information, please click here.

In addition to the 2,000 construction jobs, Minnesota Steel will create up to 700 full-time jobs and generate 2,100 spin-off jobs.

Earlier this month, the 45-day public comment period on the project’s draft environmental impact statement ended.

Once the environmental impact statement is found to have addressed all potential impacts, federal and state environmental officials can issue permits which are anticipated this summer.

Construction will begin thereafter.

In December, the State of Minnesota approved a 7,000-plus acre land swap to ensure Minnesota Steel will have enough acreage for its operation.

In November, Minnesota Steel secured capacity to transport low-cost natural gas from Alberta, Canada, via the Great Lakes Gas Transmission Co. - locking in transport capacity, which is extremely limited, and saving up to 70 percent on transmission rates.

About Essar Global

Essar Global is an international conglomerate operating in six business areas - steel, oil and gas, power, communications, shipping and logistics, and construction.

It has offices world-wide and employs approximately 20,000 people, including over 3,500 persons in the United States.

The group has an enterprise value of approximately USD 20 billion.

For further information, please visit this website.

Essar Steel Holdings is a global producer of steel covering India, Canada, USA, the Middle East and Asia.

It is a fully integrated flat carbon steel manufacturer - from iron ore to ready-to-market products - supplying highly discerning customers in the automotive, white goods, construction, engineering and shipbuilding industries.

With a current capacity of nine million tonnes, Essar’s expansion in India, Asia and North America will see capacity rise to 20 to 25 million tonnes by 2012.

************************* Earlier SooToday.com coverage on this story

Statement by Algoma Steel Inc.