| B. Muthuraman, MD, Tata Steel
Calcutta, Nov. 12: Tata Steel may consider a primary steel unit in iron-ore rich Brazil. The move is in line with the company’s strategy to make steel globally.
The company aims to make primary steel products, such as billets, near the sources of raw materials and manufacture the finished products at its plants in the developed or emerging markets.
“We are looking at every opportunity,” Tata Steel managing director B. Muthuraman said when asked about the possibility of a primary steel unit in Brazil.
Brazil has one of the largest deposits of iron ore in the world and is a leading exporter of ore along with Australia. The country exported 181 million tonnes in 2005.
“The way steel has been produced for the last 100 years has to change. Tata Steel will be at the forefront of that change,” Muthuraman said.
Following this strategy, Tata Steel will make billets in Jamshedpur to supply to the finishing mills of its Southeast Asian subsidiaries, NatSteel and Millennium Steel.
If Tata Steel acquires Corus, it will follow the same model; the company’s proposed greenfield units will make intermediate products for the plants of Corus, bringing down Corus’s costs. Corus chairman Jim Leng had said the Tatas provided the Anglo-Dutch steel maker with an access to a low-cost production facility.
Building on its vision to have primary steel facilities close to raw material sources, Tata Steel is keen to expand in Bangladesh and Iran which are rich in natural gas.
But these projects are yet to take off.
The company is also setting up a ferro chrome plant in South Africa, to cash in on the low cost of electricity in the country.
Muthuraman ruled out the possibility of exporting iron ore from India but said the company was open to acquiring ore mines elsewhere.
“Brazil being one of the emerging economies of the world along with India and China, a production base can give the Tatas a toehold in the local market,” an analyst said.
It is not clear if Tata Steel will consider acquiring an existing unit or set up a greenfield plant in Brazil.
“A company of Tata Steel’s size, Tata Steel’s vision and aspiration will look for acquisition opportunities,” Muthuraman said.
- Possible move for a Brazil base fits with plans for multiple global production bases, with primary steel facilities close to raw material sites and finished production elsewhere
- Brazil a leader in ore exports along with Australia
- Domestic market of Latin American giant also large enough in itself for the Tatas to set up shop
- Tatas to make billets in Jamshedpur, export them to its Southeast Asian plants for value addition
- Tatas not to export ore from India