|Tata and Mittal: Ore war
Jamshedpur, May 11: The battle for iron ore has pitted the formidable Tatas against steel emperor Laxmi Niwas Mittal.
In a rare outburst in the presence of Jharkhand chief minister Arjun Munda, Tata Steel managing director B. Muthuraman questioned in a public meeting whether Mittal Steel would create value for the state.
He did not name Mittal, though.
Calcutta-born Mittal, the world leader in steel with a 70-million-tonne capacity and with presence in 14 countries, is planning to set up a 10-million-tonne plant in Jharkhand. Mittal Steel officials met Munda last week.
In comparison, Tata Steel’s total capacity here is about 5 million tonnes.
Invoking what the Tatas have done for Jharkhand and the nation as a whole, Muthuraman said decision-makers should consider whether the new entrants (which includes Mittal) would make the same contribution.
“Tata Steel has a shareholder base of 10 lakh individuals. We have doled out no less than Rs 45,000 crore for the nation since inception 98 years ago. And there is a company which has only one shareholder, creating wealth for himself,” he said, attacking Mittal indirectly.
He also made a remark on Mittal’s famous purchase of a house in London at a cost of '70 million without naming the steel tycoon.
The outburst is the first public sign of the intense corporate competition to grab sources of raw material in the steel industry that is on an international upcycle.
Demand for iron ore and coal, the key raw material for steel making, and rising prices have brought the big names in steel, like South Korea’s Posco, to eastern Indian states like Orissa, Jharkhand and Chhattisgarh.
States with iron ore have wisened up to the possibility of reaping benefits from the boom and have been insisting that companies wishing to use the raw material would necessarily have to set up steel-making capacities within their boundaries.
Munda gave an indication of this new-found bargaining power when he dismissed Muthuraman’s argument against entertaining investors from outside.
“Jharkhand has 37 per cent of India’s mineral reserves but 54 per cent of our people are still below the poverty line. We have to ensure a good quality of life for them. We will do whatever it takes to achieve that,” he said at the ceremony to mark the addition of 1-million-tonne capacity at Tata Steel here.
Going a step further, Raghubar Das, the state finance minister, said in a globalised environment, anybody can invest in Jharkhand. “Tata Steel is going to Orissa, Bengal and South Africa. So others may also come here,” Das said.
Munda was non-committal about Bengal’s request for access to iron ore for a steel plant the Jindals want to set up in the neighbouring state.
“We will take a decision in the best interest of our state. Whoever creates value will be preferred,” he said.