When President Donald Trump sat at his desk in the Oval Office on Monday and announced the construction of a massive $15 billion steel plant, he was flanked by mostly U.S. politicians, from cabinet members to a lawmaker from Iowa, where the steel mill would be built. There was one exception. An Indian man with a receding hairline and a lilac pocket square stood behind the U.S. president’s right shoulder.
Rabbi Ruia is a co-founder of Essar Group, which owns Mesabi Metallics, a Minnesota-based company that is building the steel mill, which is expected to be the largest in the United States when completed. Ten years ago, in October 2016, his younger brother Shashi appeared in a photo frame with another president, Russian leader Vladimir Putin, signing another important contract.
Essar’s involvement with minerals and natural resources goes beyond steel and metals. The conglomerate had been involved in oil for years before selling one of India’s largest private refineries to a Russian-led consortium for about $13 billion in 2016. Essar Oil has been rebranded as Nayara Energy.
Nayara Energy is currently half-owned by Russian gas giant Rosneft, and is under heavy sanctions from the United States and Europe over Russia’s war with Ukraine. Nayara has also emerged as a supplier of oil products to Russia as the country faces a fuel crisis following multiple attacks on oil and gas depots by Ukraine.
And as part of the 99-year agreement, Nayara continues to use the Essar brand in India, where the company operates thousands of gas stations. Nayara is under European Union sanctions.
The White House is touting the Iowa steel project, announced just before the US midterm elections, as a major economic victory for Americans, with the promise of hundreds of jobs and billions of dollars in revenue. There is also no evidence that the steel project violates Russia-specific US sanctions.
But President Trump’s announcement of a huge project with an Indian company with close ties to Russian investment under Western sanctions underscores how the United States is struggling to isolate Russia economically despite an unprecedented economic pressure campaign.
The timing of the steel mill’s announcement also raises questions. That comes just days after President Trump signed into law a law that gives countries that buy Russian oil the power to impose tariffs of up to 100%. India is Russia’s second largest oil buyer. But the traditional Indian conglomerate that best embodies India’s energy ties with Russia is now also behind the largest steel mill in the United States.
What is a steel mill project?
The new project will combine iron ore mining operations in Minnesota’s Mesabi Steel Mountains with a proposed steel facility in Iowa.
The Iowa steel mill will create at least 1,750 permanent jobs and support up to 6,000 construction jobs “while continuing to work with suppliers and businesses in Iowa and throughout the Midwest,” the White House and the company said in a statement.
Washington also said the plant is expected to produce 7.5 million tons of steel annually in the first phase, increasing to 10 million tons. First steel production is scheduled for 2030.
The first phase of the project is expected to have a total economic impact of $95 billion during construction and during its first 10 years of operation, according to the White House.
“These are 232 tariffs, working steel tariffs,” President Trump’s Commerce Secretary Howard Lutnick told reporters. He added: “Without tariffs, this mine and steel mill would not be built.”
Trump also participated. President Trump said, “Right after taking office, we imposed strong tariffs of 50% on all foreign steel, and now our steel industry is coming back to life.” “Everyone is building factories here because they don’t want to pay tariffs.”
But the steel project is also evidence of how countries and companies have circumvented U.S. economic pressure, and how that gives them leverage to continue to do so.
What is Essar’s connection to Russia?
The group’s energy arm, Essar Oil, began refining crude oil in 2008 at its refinery in Badinar, on the coast of western India’s Gujarat state.
But by 2016, the company was heavily in debt, listed as a defaulter by the country’s central bank, the Reserve Bank of India, and desperately looking for a buyer to take over its oil operations. The timing was good. At the time, Russian President Vladimir Putin was trying to get Russia’s energy giant Rosneft to sell some of its stake in exchange for foreign capital.
Indian Prime Minister Narendra Modi played the role of matchmaker, helping to seal a series of deals supporting Rosneft and Essar between 2014 and 2016. First, India’s public sector oil majors bought Rosneft’s shares, giving Rosneft the cash it needed. Meanwhile, Rosneft teamed up with other investors to buy the Badinar refinery, freeing Essar from debt.
Essar Oil became Nayara Energy, a company in which Rosneft owns 49 percent and Russian asset management company United Capital Partners owns a further 49 percent. The buyer paid Essar $12.9 billion for the deal. As part of the deal, Nayara will use the Essar brand for 99 years, including at thousands of petrol stations across India.
Is Nayara under Western sanctions?
yes. The European Union imposed sanctions on Nayara in July last year as part of a broader 18th package of sanctions against Russian oil.
The sanctions banned imports of petroleum products processed using Russian crude and restricted refineries’ access to EU transport insurance, financial services and other services.
Nayara’s Badinar refinery in western India processes only Russian crude since other suppliers withdrew due to sanctions. Since then, Nayara has relied on international traders to import crude oil and export refined fuel.
In July of this year, Nayara Energy sold oil to Russia after attacks targeting refineries across Ukraine triggered a fuel crisis.
In recent months, Ukrainian forces have targeted and set fire to Russian oil facilities, causing long lines for fuel across the country, including in the capital Moscow. The unprecedented fuel crisis in Russia, one of the world’s largest energy producers, has led to rationing in many regions.
These ties to Russia have made Nayara Energy the subject of widespread scrutiny and led to companies including SAP suspending services to the refiner, citing sanctions and obligations under EU law.
Nayara challenged the decision in the Delhi High Court, which earlier this month ordered SAP India to restore services.
Is Essar or the steel mill violating any sanctions?
Mr Nayara is under EU sanctions, but Mr Essar is not subject to US or EU sanctions.
In October 2016, after Essar signed a deal with Rosneft and United Capital Partners to sell the Badinar refinery, the United States, then under President Barack Obama, said the deal did not violate any sanctions.
State Department spokesman Mark Toner said at the time: “We do not believe there is a violation of U.S. and EU sanctions arising from this agreement.” Essar also said the deal complies with U.S. sanctions.
There is no evidence of sanctions violations in Essar’s investment in Mesabi or its proposed investment in a steel mill in Iowa.
But Essar’s ties to Russia have nevertheless come under intense scrutiny, including in Britain, where the Ruia brothers have made major investments over the years.
When the Badinar refinery was sold to a Russian buyer, Russian bank VTB also gave Essar a $3.9 billion loan to restructure its debt.
The bank was hit with major U.S. and EU sanctions in February 2022, shortly after Russia’s invasion of Ukraine began in earnest. According to a report published in April 2026 by the Guardian and investigative reporting platform Source Material, Essar allegedly moved VTB loans to the tax haven Mauritius to avoid sanctions. Essar owns the Stanlow refinery in the UK.
Why is the timing of the steel mill announcement important?
President Trump’s Republican Party faces an important mid-term Congressional election in November, with approval ratings at record lows due to voter concerns about inflation, the cost of living and war with Iran.
President Trump, in his second term, has made tariffs and a revival of American manufacturing the cornerstone of his economic vision, arguing that tougher import barriers will bring investment back to the United States.
Additionally, Washington has introduced legislation that would allow the president to impose tariffs of up to 100 percent on imports from countries that continue to have economic involvement with Russia or Iran, with the aim of putting pressure on countries that continue to purchase Russian energy.
New Delhi is particularly at risk because it became one of the biggest buyers of discounted Russian oil after the 2022 invasion of Ukraine. President Trump imposed an additional 25% tariff on imports from India in 2025 over this issue, but the tariff was lifted in February 2026 after India promised to stop purchasing Russian crude oil.
Russia remains India’s biggest source of crude oil, but purchases have declined as the threat of U.S. sanctions grows. Reuters reported that India imported about 2.1 million barrels of Russian crude oil per day in August.
There are also recent parallels that highlight President Trump’s incentives to invest in the United States. In May, Washington moved to dismiss criminal charges of fraud and bribery against Indian billionaire Gautam Adani, while his lawyers told the Justice Department that Adani was prepared to invest $10 billion in the United States. A federal judge later dismissed the criminal case in August.
