Liberty House, the commodities trading group founded by Sanjeev Gupta, emerged as an early contender for Tata Steel’s lossmaking British factories after they were put on the block in March.
But Mr Gupta’s ambition to acquire the UK’s biggest steelmaker appeared thwarted this month, when its Indian parent said it was in talks over a possible tie-up of its European operations with German rival ThyssenKrupp.
Now Liberty House has in its sights two troubled Ontario steel producers — Essar Steel Algoma and US Steel Canada — according to a person close to the briefed on the matter.
Over the past few years, Liberty has taken over and revived a number of small steelworks and metal engineering businesses across Britain. It is still in pursuit of two UK steel units Tata is selling off separately.
With the global steel industry reeling from low prices and oversupply, Mr Gupta’s latest potential wagers are on a larger scale and come late in the day. Both Canadian companies are in financial difficulties, operating under creditor protection and already the subject of ownership battles.
“It’s a messy story. These are two companies that have had significant issues with management,” said Chuck Bradford, an industry analyst.
New York-based private equity fund KPS Capital Partners, which had intended to combine the pair, pulled out of the running last week after failing to reach agreement with the provincial government.
Its bid for Algoma’s assets, made jointly with certain lenders to the business, had been accepted.
Another Algoma suitor is a group including shareholders of its former owner, Essar Global, an Indian energy and resources conglomerate that acquired the mill nearly a decade ago. It is attempting a $900m recapture and wants the sales process reopened.
While Essar has won support from the United Steelworkers Union, the target company has dismissed its approach.
Essar has similar designs on US Steel Canada, a former unit of the American giant, though its offer was earlier rejected. Bedrock Industries, a private equity house, was also said to be in the race for US Steel Canada.
Bedrock declined to comment.
Liberty was engaged with the sales processes for both assets, said the person briefed on the matter. Separately, it is “monitoring” an iron ore pellet plant under development by Essar in Minnesota that has filed for bankruptcy protection, with the view that it could supply the Canadian mills.
An Algoma spokesman confirmed the lenders were pushing ahead with their bid without KPS, but said they were legally bound not to name other parties involved. US Steel Canada did not respond to requests for comment.