June, 24 2005
Tata Steel plans to invest Rs. 25,000 cr
Tata Steel on Wednesday revealed plans to make an investment of about Rs. 25,000 crores in the next five years to increase its manufacturing capacity to 15 million tonnes.
"We are looking at an investment of Rs. 23,000 crores to Rs. 25,000 crores by 2010. The plans include expansion at the Jamshedpur plant and building new capacities in Orissa and Chhattisgarh," Managing Director of Tata Steel B. Muthuraman told newspersons here.
Capacity expansion apart, the country's largest private sector steel major is eyeing acquisitions abroad. Announcing plans to acquire steel companies in China and South-East Asia, he said: "Discussions are on with some of the companies and a final decision will be taken soon."
A significant portion of the required investment, Mr. Muthuraman said, would be generated from internal resources. With a debt-equity ratio of 0.4:1, the company has enough leverage to raise funds from the market, he said. Although the facility is available, there are no immediate plans to tap the market. "This will be decided as and when the time comes," he said.
On the entry of global steel majors such as Posco of Korea and the L.N. Mittal group, Mr. Muthuraman denied any effect on the company's supremacy in the country and said: "The steel scenario is such that their entry is always welcome."
On the controversial issue of export of iron ore from India one of the conditions that Posco has been insisting on for setting up its plant in Orissa the Tata Steel chief said the matter had to be seen in the right perspective.
The country, he said, had iron ore reserves of about 20 billion tonnes. In view of the population and the higher per capita steel consumption in future, India had the potential to utilise the entire reserves. They might fall short in the long run, he said.
Having acquired land in Orissa and Chhattisgarh to set up plants, he said Tata Steel would be applying shortly for taking mines on lease.
At present, the company is manufacturing five million tonnes of steel at Jamshedpur. It plans to increase its capacity by another two million tonnes there for which orders for machinery are likely to be placed next month, Mr. Muthuraman said. The capacity expansion is to be completed by 2008.
In Orissa, the plan is to set up a six million tonne plant in two phases and the first phase of three million tonnes is to be completed by 2009. It would take another three years to complete the second phase.
Left warns of tough ride for steel giant
The Orissa Opposition, led by the Left, has lined up a rocky welcome for the proposed Posco steel plant at Paradip.
The 12-mt (million tonne) steel plant, which has brought India its biggest ever foreign direct investment of $12 billion (Rs 52,000 crore), could find itself hamstrung by controversies over rehabilitation and a shortage of power.
The Opposition, which has been protesting against yesterdays MoU that awarded the South Korean steel major the right to export 30 per cent of the ore it mines, has called for a convention of mining experts and economists to protest against the deal. The meeting will be held in the second week of July, CPM leader Janardan Pati said.
The state Congress, however, is in two minds about opposing the Posco deal.
Pati suggested that Posco will face problems over rehabilitation of those its project will displace in the Kujang area of Paradip.
Last month, there was a violent rally in Kalinga Nagar, Jajpur, with protesters demanding adequate compensation from a company that was setting up a much smaller steel plant in the area.
Poscos only motive is to make profits. Its promise of 13,000 direct employment is a hoax; it cant provide more than 5,000 jobs, the CPM leader said.
Questions are being raised on whether the plant will get enough electricity. Although the company plans to put up a captive power plant, it may face a shortage of coal. Nalco and Rourkela Steel Plant have been forced to slash production because of short supply of coal.
Posco, however, yesterday tried to douse the controversy over its right to export ore from Orissa by pointing to the poor quality of the mineral. It said that if it were possible to make quality steel solely with ore from its captive mines in the state, the company would have used all of it instead of exporting some. However, the company needs to import better quality ore from Brazil and blend it with the ore mined in Orissa to be able to make good steel. It would be exporting only an equivalent amount of ore, the head of the companys India project, Jeong Tae-hyun, said.
Jeong was immediately asked how Posco found the ore so inferior when other steel-makers considered it of the best quality.
All that glitters is not gold, Jeong said. Likewise, in steel, all steel is not the same. I respect Indian steel, but it is different from ours. He explained that Posco needs ore whose alumina content is less than 1.2 per cent whereas the ore in Orissa contains 2.4 per cent to 3.4 per cent alumina. The imported ore will cost 60 per cent more, the official said, pushing production cost up by 20 per cent, but it cant be helped.
Media boycotts Poscos press conference
The media today staged a walkout from the Korean steel major Posco's maiden press conference in the capital to announce its $ 12-billion investment in the country, incensed at the alleged partiality shown to a television channel. The invite said the meet would begin at ''sharp'' 11 hours and Posco Chairman Lee Koo-Taek would leave the venue at 11:50 hours. The press conference, however, was delayed by over 40 minutes as Koo-Taek was busy giving an exclusive interview to a news channel. Enraged by this, the rest of the press decided to boycott the meet.
Posco had yesterday signed a MoU with the Orissa government to set up a 12 million tonne steel plant in Paradeep.
POSCO sees strong steel demand in Asia
POSCO, the world's fifth-largest steel maker, sees strong demand for steel from Asia, particularly China, and does not forsee a sharp price fall despite its getting rid of excess inventory, its chairman said on Thursday.
"For the last two years, we have seen a sharp increase in steel prices. But we are going through some adjustment period now," Lee Ku-Taek told TV news channel CNBC, when asked about his outlook for steel prices. He was speaking in New Delhi a day after POSCO signed a deal to set up a four-tranche, $12 billion integrated steel project in the eastern state of Orissa.
"The demand for steel from Asia, especially from China, is very robust now. Therefore we are trying to get rid of some excess inventory, but this is an adjustment period," he said. "So I don't forsee any sharp drops in steel prices in the near future."
He said he expected the price of hot-rolled coils to remain at more than $500 per tonne.
POSCO, which sells 75 per cent of its output at home, has enjoyed strong earnings, helped by high domestic steel prices and robust global demand.
Jharkhand eyes $25 billion investment in steel sector
Among the companies that are flocking the State include Jindal Iron and Steel Ltd., Essar Steel Ltd., Monnet Ispat Ltd. and Sunflag Iron & Steel Co. Ltd.
Indias mineral-rich state of Jharkhand expects to draw more than $25 billion in investments from firms including Mittal Steel Co. to build new steel and copper plants, a top government official said.
Metal companies are flocking to Jharkhand, a poor state in the countrys east, in order to tap into its huge iron ore, copper and coal deposits.
Steel firms view India as an ideal place to invest because of its mineral wealth and affordable labour. Asias fourth-largest economy, like China, has also emerged as a metal consumer in its own right as its economy looks set to grow 7 per cent this year. We have firm investment proposals worth 78,000 crore ($18 billion) and there are more proposals under discussion, A K Singh, secretary of the department of mines and geology in Jharkhand, told Reuters by phone from the states capital Ranchi.
Steel companies such as Jindal Iron and Steel Ltd., Essar Steel Ltd., Monnet Ispat Ltd. and Sunflag Iron & Steel Co. Ltd. have already made initial commitments to the state government.
Mittal Steel, the worlds largest steel maker, has completed an appraisal of the states potential for setting up a manufacturing base and was expected to sign a deal with the Jharkhand government in the next two months, Singh said. Mittal Steel said this week it was in talks with Jharkhand about building a steel mill and iron ore mine, but denied media reports of plans to spend $6 billion on a 10-million-tonne plant. After the visit to the state, Mittal Steels officials were very confident of finalising a deal. Similarly, we too are confident they would decide to invest in Jharkhand, Singh said in the interview.
Trial production on in six plants in Orissa
Trial production has started in six steel plants and another 20 plants are likely to go on steam by 2006 end, said Steel and Mines Minister Padmanabha Behera.
SPS Sponge Iron, Jharsuguda, SMC Power, Bhusan Steel, Duburi, SCAW, Dhenkanal and Arati Steel near Athagarh have started trial production while Nepaz Metallic, Rourkela will be commissioned within a week, Behera said.
The Minister said several small and medium steel projects are in different stages of construction and these plants are expected to launch commercial production within two or three years.
However, big projects proposed by Sterlite, Tata, Jindal Steel and Power and SR Tubes India may take more time, he said.
After signing memoranda of understanding with 38 companies including Korean steel giant POSCO, the State is poised to take up steel and aluminium production in a big way, the Minister said.
Cong to prevent export of iron ore
President of Orissa Pradesh Congress Committee (OPCC) Jayadev Jena said on Wednesday that a Congress delegation from the State would meet Prime Minister Manmohan Singh and UPA Chairperson Sonia Gandhi to apprise them of the Posco deal.
The Congress chief said though the party is not opposed to the establishment of the steel plant, it can go to any extent to stop export of iron ore from the State. He alleged that there might be a kickback in the deal.
Addressing mediapersons here, Jena, however, maintained that the Posco project materialised because of the Centres drive to set up mega industries in the country. Establishment of mega industries was part of the Common Minimum Programme (CMP), he said.
Posco may team up with local partner in India
Posco, is likely to involve an Indian company along with Australian mining giant BHP Billiton in developing its captive iron ore mines in Orissa.
They (BHP Billiton) were our partners. We would like to give them priority. But, we still have to negotiate ... We may even rope in an Indian company, Posco chairman and chief executive officer (CEO) Ku Taek Lee said. Head of the Posco India project Tae-Hyun Jeong has hinted that BHP Billiton would be involved in the project at a later stage.
In August last year, when Posco gave the presentation to the Orissa government about its project, it had clearly mentioned that BHP Billiton would be a partner. However, the MoU signed Wednesday is silent about BHP Billitons role. BHPs involvement has nothing to do in terms of the MoU, said the Posco chairman, hinting at the Australian mining companys association with the project at a later stage. Jeong, however, is very clear about BHP Billitons role in the project. It is yet to be decided, he said when asked how it planned to develop the mines, considering that the MoU does not have any reference to BHP Billiton.
Posco has reportedly been assured of the Gandhamardan-Malangtuli iron ore mines on the border of Keonjhar-Sundergarh district for its Paradeep project. The mines promise a deposit of about 400 million tonne of quality iron ore.
Dwelling on the controversial ore export issue, Jeong, at a session with reporters said that given a choice, the company would like to use 100% ore from its captive mines in Orissa, if it was possible to produce the same quality of steel as in its Pohang plant without going for any import.According to him, the company sought to export a part of its requirement and import low-alumina ore from Latin America, because sample surveys by the company officials found that iron ore deposits in the state have a very high alumina content. The Posco standard is 1.2% alumina content, whereas at some places in Orissa, it was found to be 2.4 and somewhere 3.4%, he pointed out.
NMDC gets ISO certification
National Mineral Development Corporation (NMDC) has received the Environment Management Systems Standard ISO 14000:1996 for its four production projects from Det Norske Veritas (DVC), Netherlands.
B Ramesh Kumar, CMD of NMDC, received the certificates from Ashok Balwani, regional manager (southeast Asia operations) on June 15, 2005.
The projects covered under the certification are Bailadilla Iron Ore Deposit-5 and Bailadilla Iron Ore Deposit-14/11C in Chattisgarh, Donimalai Iron Ore Mine in Karnataka and Majhgawan Diamond Mining Project in Panna, Madhya Pradesh.
They have been implementing the systems conforming to the certified standards during the last three years.
POSCO chief meets PM
In the backdrop of the Rs 52,000 crore Memorandum of Understanding signed between Orissa government and Korean steel giant POSCO, the company's Chairman and CEO Lee Ku -Taek today met Prime Minister Manmohan Singh.
Singh and Lee met this evening and are understood to have discussed the Korean company's plans in the country.
On Wednesday, POSCO signed a MoU with the Orissa government for establishing a 12 million tonne integrated steel plant at Paradip.
