The Telegraph
Since 1st March, 1999
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Tatas forge Iran steel alliance

Mumbai, June 12: Tata Steel today signed a joint venture agreement with an Iranian company under which it will set up manufacturing projects of up to 6 million tonnes and develop unexplored iron ore mines in the country.

The deal with Iranian Mines and Mining Industries Development and Renovation Organisation (IMIDRO) opens up a beachhead in the West Asian nation for the Tatas, who already have steel units in Singapore, China, Malaysia, Thailand, Australia, Vietnam and the Philippines.

“Iran, with its rich reserves of inputs and quality infrastructure, can become one of the favourable locations for the steel industry,” Tata Steel managing director B. Muthuraman said after signing the pact in Tehran. The company did not put a figure on the value of the venture.

The 98-year-old Tata Steel will now have an outpost in the Iranian port city of Bandar Abbas, where Iranian Mining Industries Organisation is based. Among the projects that will be set up under the alliance is a 1.5 million tonnes per annum (MTPA) steel slab making facility, a 1.5 MTPA steel billet making unit and a 3 MTPA export-oriented steel plant. The Tatas will also work on the Hormozgan Steel project in Bandar Abbas, which is part of the Persian Gulf Special Economic Zone.

The exploration of iron ore will focus on the Gol-e-Gohar mines in Iran’s Kerman province. A gas-based pellet plant planned at Gol-e-Gohar will use this iron ore. The steel export plant, which will be built in two phases of 1.5 MTPA, is envisaged near the Hormozgan unit.

Tata Steel’s interest in Iran has hardly been a secret. In April, the Indian Ambassador to Iran took the lid off the plans when he revealed that the Tatas and Ruias of Essar were keen to open a beachhead in the ore-rich country.

The Iran foray is also heavy with nostalgia for the Tatas, whose ancestors are believed to have fled to Gujarat and Mumbai to escape religious persecution in Iran. Some historians dispute this theory, arguing the Parsi community flocked to India in search of new business.

Recently, a Iranian company lost the race for Basell ' the Dutch petrochem giant snapped up by Purnendu Chatterjee ' after the US government lobbied against it. Renault plans a large car-making unit in that country.

For now, the Iran alliance will give Tata Steel an unassailable lead. It produces 5 million tonnes at its Jamshedpur plant, acquired 2 million tonnes from Singapore’s NatSteel, has pacts with the Orissa government for setting up a 6-million tonne venture and with the Chhattisgarh government for a 5 million-tonne plant.

The company will expand its Jamshedpur facility by 2.4 million tonnes at an estimated cost of Rs 7,800 crore. It also plans a 2.4 million tonne unit in Bangladesh.

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