Armed with abundant ore reserves and facing a tough battle from Chinese firms as it hopes to tap export markets, India’s steel industry is chasing further acquisitions and greater output, an analyst said on Monday.
“For us, the takeover of Corus is the starting point for more mergers and acquisitions from India,” Joachim Schroeder, CEO of Research and Consulting Group AG, said.
Tata Steel’s $12billion takeover of Anglo-Dutch steelmaker Corus in January created the world’s fifth-biggest player as it beat off a bid from Brazil’s Companhia Siderurgica Nacional. The Indian firm has spent more than $400 million in recent years to buy Singapore’s NatSteel and Thailand’s Millennium Steel, and other Tata companies have bought firms outside India.
“We know there are activities. They (Indian steel companies) are targetting markets abroad,” Schroeder added.
Indian steel firms will seek to drive home a cost advantage due to an abundance of iron ore reserves, which opens the door for them to a huge retail opportunity in other markets, he added.
India has high-quality iron ore reserves totalling about 23 billion tonnes, coupled with a strong pool of skilled technical manpower and a booming domestic market.
Stiff competition from Chinese firms was also driving Indian interest in further overseas purchases and mergers, Schroeder said. “All the products being exported by India, China is also exporting. (They) are targetting the same countries,” he said of a range of products, including flat, long and tube steel.