As United States President Donald Trump announced a $15bn steel megaplant while seated at his Oval Office desk on Monday, he had a lineup of mostly US politicians standing behind him – from cabinet members to elected representatives from Iowa, where the mill is to be built. There was one exception: an Indian man with a receding hairline and a lilac pocket handkerchief, standing behind the US president’s right shoulder.
Ravi Ruia is a cofounder of the Essar Group, which owns Mesabi Metallics, the Minnesota-based firm that is building the steel mill, expected to be the US’s largest. A decade earlier, in October 2016, his brother Shashi was in the photo frame with a different president during the signing of another major deal: Russian leader Vladimir Putin.
Steel and metallics are not Essar’s only association with minerals and natural resources. The conglomerate had been involved in oil for years, before selling one of India’s largest private oil refineries to a Russian-led consortium in 2016 for nearly $13bn. Essar Oil was rebranded as Nayara Energy.
Today, Nayara Energy is half-owned by Russian gas major Rosneft, which is under heavy US and European sanctions over Moscow’s war on Ukraine. Nayara has also emerged as a supplier of petroleum products to Russia at a time when the country is facing a fuel crisis following multiple Ukrainian attacks on its oil and gas depots.
As part of a 99-year deal, Nayara is continuing to use Essar’s branding in India, where the company runs thousands of petrol stations. Nayara is under European Union sanctions.
The White House is touting the Iowa steel project, unveiled weeks before the US midterm elections, as a major economic win for Americans, promising hundreds of jobs and billions of dollars in revenue. And there is no evidence that the steel project is in violation of any Russia-specific US sanctions.
But Trump’s announcement of a megaproject with an Indian firm closely tied to Russian investments under Western sanctions underscores how the US has struggled to isolate Moscow economically despite an unprecedented economic pressure campaign.
And the timing of the steel mill announcement raises questions, because it comes days after Trump signed a law that empowers him to punish countries that buy Russian oil with up to 100 percent tariffs. India is Russia’s second-largest oil buyer. But the legacy Indian conglomerate that best epitomises the country’s links to Russian energy is now also behind the US’s biggest steel factory.
What’s the steel factory project about?
The new project would integrate its iron ore mining operations in Minnesota’s Mesabi Iron Range with the upcoming steel complex in Iowa.
The White House and the company’s announcements said the Iowa steel plant is expected to create at least 1,750 permanent jobs – “while continuing to work with suppliers and businesses throughout Iowa and the Midwest” – and support up to 6,000 construction jobs.
Washington also noted that the mill will produce 7.5 million tonnes of steel per year in its first phase, with production expected to rise to 10 million tonnes. Steel production is expected to begin in 2030.
The first phase of the project is expected to generate $95bn in total economic impact during construction and its first 10 years of operation, according to the White House.
Commerce Secretary Howard Lutnick told reporters that “these are your 232 tariffs, the steel tariffs at work”. He added: “Without those tariffs, this mine and steel plant doesn’t get built.”
Trump chipped in, too. “Soon after my inauguration, I imposed powerful 50 percent tariffs on all foreign steel, and now our steel industry is roaring back to life,” he said. “Everyone’s building their plant here because they don’t want to pay tariffs.”
But the steel project is also evidence of how countries and companies have skirted US economic pressure – and how it gives them leverage to continue to do so.
What are Essar’s ties to Russia?
Essar Oil, the group’s energy arm, began refining crude in 2008 at its refinery in Vadinar on the coast of the western Indian state of Gujarat.
But by 2016, the company was in deep debt, listed as a defaulter by the Reserve Bank of India, the country’s central bank, and desperately looking for a buyer who would take over its oil operations. The timing was opportune. President Putin was at the time trying to get Rosneft, Russia’s energy giant, to offload some stakes in exchange for foreign capital.
Indian Prime Minister Narendra Modi played matchmaker, helping stitch together a series of deals between 2014 and 2016 that helped Rosneft and Essar. First, Indian public sector oil majors bought stakes in Rosneft, giving it the cash it needed. Rosneft, in turn, joined hands with other investors to buy the Vadinar refinery, freeing Essar from its debts.
Essar Oil became Nayara Energy – a company in which Rosneft owns a 49 percent stake, and United Capital Partners, a Russian asset management company, owns another 49 percent. The buyers paid Essar $12.9bn for the deal. As part of the agreement, Nayara got to use Essar’s branding – including on thousands of petrol stations across India – for 99 years.
Is Nayara under Western sanctions?
Yes. The EU imposed sanctions on Nayara in July last year as part of the broader 18th package of sanctions against Russian oil.
That banned the import of petroleum products processed using Russian crude oil and restricted the refinery’s access to EU shipping insurance, as well as financial and other services.
Nayara’s Vadinar refinery in western India has been processing only Russian oil since other suppliers backed out following the sanctions. Since then, Nayara has relied on international traders to import crude and export refined fuels.
In July this year, Nayara Energy sold petroleum to Russia as Ukrainian attacks targeted oil refineries across the country, triggering a fuel crisis.
In recent months, Ukrainian forces have targeted Russian oil facilities, setting them ablaze and causing long lines for fuel across the country, including in the capital, Moscow. The fuel crisis, unprecedented for Russia, one of the world’s biggest energy producers, has led to rationing in many regions.
These Russian links have brought Nayara Energy under wider scrutiny, prompting companies, including SAP, to suspend services to the refiner, citing sanctions and obligations under EU law.
Nayara challenged the move in the Delhi High Court, which ordered SAP India to restore its services earlier this month.
Are Essar or the steel plant violating any sanctions?
While Nayara is under EU sanctions, Essar does not face any US or EU sanctions.
In October 2016, after Essar struck its deal with Rosneft and United Capital Partners to sell the Vadinar refinery, the US – at the time under the Barack Obama administration – said the agreement did not violate any sanctions.
“I don’t think we see any violation of any US-EU sanctions stemming from this deal,” State Department spokesperson Mark Toner said at the time. Essar also said the deal was compliant with US sanctions.
There is no evidence of any sanctions breach in Essar’s investment in Mesabi, or in the planned investment to set up the steel factory in Iowa.
But Rishika Chauhan, a researcher at the Centre for Science and Security Studies (CSSS), King’s College London, who focuses on sanctions, said Essar’s investments in the US now make it “more predisposed to American arm-twisting, as sanctions and other actions can be taken more easily on the conglomerate’s assets and investments in the US now, and US laws can be used on it”.
Chauhan noted that sanctions on Russia and Iran have “a provision to impose new tariffs on the states that import from certain countries that purchase Russian energy or facilitate Russian oil sanctions evasion”.
“Essar can certainly come under the purview of these and many other US sanctions laws and executive orders,” she told Al Jazeera. “It isn’t a simple exercise, but sanctions and tariffs are often used by Trump as leverage to get what they want.”
Essar’s relations with Russia have also attracted scrutiny elsewhere, including in the United Kingdom, where the Ruia brothers have long had major investments.
At the time of the sale of the Vadinar refinery to Russian buyers, the Russian bank VTB also gave Essar a $3.9bn loan for debt reconstruction.
The bank was hit by major US and EU sanctions in February 2022, right after Russia’s full-fledged invasion of Ukraine. Reporting published in April 2026 by The Guardian and investigative journalism platform SourceMaterial showed that Essar moved the VTB loan to Mauritius, a tax haven, allegedly to avoid the sanctions. Essar owns the Stanlow oil refinery in the UK.
Why is the timing of the steel plant announcement significant?
Trump’s Republican Party is heading for crucial midterm congressional elections in November, while his approval rating has been plumbing all-time lows in the face of voter concerns about inflation, cost of living and the US-Israel war on Iran.
In his second term, Trump has made tariffs and the revival of US manufacturing a cornerstone of his economic vision, claiming that higher barriers to imports will drive investment back to the US.
Moreover, Washington introduced legislation that would allow the president to impose tariffs of up to 100 percent on imports from countries that continue economic engagement with Russia or Iran, aiming to put pressure on those buying Russian energy.
New Delhi is particularly exposed since it became one of the largest buyers of discounted Russian crude after the invasion of Ukraine in 2022. Trump imposed an additional 25 percent tariff on Indian imports in 2025 over the issue, before removing it in February 2026 after India committed to stop buying Russian crude.
Russia has remained India’s largest source of crude, although purchases have declined as the threat of US penalties has grown. The Reuters news agency reported that India imported approximately 2.1 million barrels per day of Russian crude in August.
There is also a recent parallel to underscore the incentives for investment in Trump’s US. In May this year, Washington moved to dismiss the criminal fraud and bribery charges against Indian billionaire Gautam Adani, while his lawyers had told the Justice Department that his group was prepared to invest $10bn in the US. A federal judge subsequently dismissed the criminal case in August.
Chauhan said capital investment in Trump’s US does provide an incentive to companies looking to distance themselves from dealings with Russia, but it does not guarantee a shield from Washington’s weaponisation of sanctions and tariffs. “Sanctions politics is quite interesting and cannot be taken at face value; laws and executive orders are a starting part, but many other parts of this moving machinery need to be understood,” he added.
