Tata Steel to raise manufacturing capacity 3-fold

Tata Steel to raise manufacturing capacity 3-fold

Mumbai: Leading steel-maker, Tata Steel’s steel manufacturing capacity in India will increase three-fold at 21 million tonnes per annum (mtpa) from the present 7mtpa following the completion of its expansion project at Jamshedpur and its two greenfield plants at Orissa and Chattisgarh becoming operational.

“After completion of the three million tonne expansion project at Jamshedpur, the company’s steel manufacturing capacity in Indian operations will enhance to 10mtpa by 2012," Tata Steel’s chairman, Ratan Tata, said at the annual general meeting of Tata Steel here.

The company is also setting up six MTPA greenfield steel plant at Kalinganagar in Orissa and five MTPA greenfield integrated steel plant at Bastar in Chhattisgarh.

“We are in the process of placing orders for equipment for our six million tonnes greenfield steel plant in Orissa, which is expected to be on ground in three to four years," Tata said.

The company is constructing the said plant in two phases. The company is focusing on land acquisition, rehabilitation and resettlement of the people, he said.

As per the MoU signed with the Orissa Government, the company has fulfilled its obligations of placing the order for equipment and services.

The company has also signed an MOU with Chhattisgarh government for setting up a five MTPA steel plant, for which the process of land acquisition commenced with multi-level discussions with stakeholders.

The land has been transferred in favour of the Department of Industries, which will subsequently lease it out to Tata Steel.

Tata, however, did not divulge the time-frame for the completion of the project. Tata Steel plans to invest ,500 crore this fiscal followed by 7,000 crore in 2011-12 for various projects.

Such huge investments have not been seen in the last 15-20 years. “All efforts are being made to deleverage our balance-sheet for funding these projects," Tata said.

Though the present environment is very conducive for the steel business on the back of an increasing demand for the commodity from the auto, construction and infrastructure sectors, Tata said that international operations were badly hit last year (FY10). However, India still remains a net importer of steel.

Tata said China produced 600 million tonnes of steel in 2009 against the global consumption of 1.2 billion tonnes.

India’s steel production stood at 57 million tonnes and is expected to grow further to 120 million tonnes by 2014.

“There is tremendous opportunity in India, what with huge investments being planned in infrastructure, besides demand from the real estate, automobile and white goods segments," he said.

Tata expressed concerns over the increase in iron ore and coking coal prices, where three major mining companies -- Brazilian mining giant Vale, BHP Billiton and Rio Tinto -- control 80% of the resources.

The steel industry is fragmented with the top 10 manufacturers accounting for just 23%. Therefore, the ability to negotiate better prices (for raw material) is somewhat muted, Tata said.

The company has implemented a long-term strategy to secure ownership of assets that will increase its raw materials security and share of value-added products.

Tata Steel has taken a series of initiatives to source raw materials and tide over the situation.

The company has made substantial investments in a large iron ore project in Canada and a coal project in Mozambique which will help its European operations get adequate raw material supplies, Tata said, adding that these two foreign resource ventures would cater to 20% of the raw material needs of Corus.