Ranchi/Jamshedpur, Jan. 31: “Tatas of course know best but would it have made better business sense for them to acquire an iron ore mine or a steel plant in Brazil'” wondered aloud a senior steel executive here today, soon after receiving the report that Tatas had clinched Corus.
The worry is shared by many observers in the steel industry, who fear that an iron ore shortage might affect Tata’s bull-run.
From its present capacity of barely 5.3 million tonnes per annum, they point out, Tata Steel is seeking to make a giant leap to produce over 50 million tonnes in less than 10 years.
With around 30 million tonnes of its capacity planned to be produced in its plants at Jamshedpur, Kalinganagar (Orissa), Jagdalpur (Chhattisgarh) and Kharsawan, it will require access to a lot more iron ore mines and will have to invest much more in mining.
Capacity expansion by Tata Steel will require a massive increase and investment in mining activities as well. But steel executives in Tata Steel and SAIL felt that the threat of a iron ore crunch is far-fetched.
“The acquisition is a landmark for the Indian steel sector,” said Jagdish Singh, the executive director in-charge of the research and development wing of SAIL.
The acquisition, said SAIL executives, would benefit all Indian steel manufacturers. It will create a more favourable international market for Indian steel and add more value to Indian iron ore, they asserted.
Tata Steel currently has captive iron-ore mines at Noamundi in West Singhbhum and Joda in Orissa. About 10 MT of iron ore are mined annually from these sources. But with its greenfield projects in the three Indian states, and expansion of its existing plant, would add 21 million tonne capacity and the company will require to mine over 50 million tonnes of iron ore to utilise its domestic capacity.