Entirely reliant on non-captive sources to feed its plants in Europe, Tata Steel will stick to long-term policy of being an "early stage investor" when it comes to acquiring raw material assets, a senior company official said.
Tata Steel Group Chief Financial Officer (CFO) Koushik Chatterjee, talking to reporters here last evening, said that the firm always prefers to invest in the early stage of a mine, rather than putting in a huge sum in a developed one.
"We are an early stage investor. We want to buy assets which are in their early stage of development... We make them operational," Chatterjee said pointing out company's strategy on securing raw material assets.
In the backdrop of rising raw material prices, Tatas plan of action might not bring in an immediate impact on company's bottomline; but in the long-run, the strategy would bear fruit as assets are becoming dearer in the wake of scarcity.
"We keep on looking out for opportunities," Chatterjee said when asked if there was any raw material assets acquisition on the cards.
The home-grown steel major recently sold its entire 26% stake in Australian coking coal mining company Riversdale for $1.1 billion to mining major Rio Tinto.
More From This Section
Tata Steel, which acquired Anglo-Dutch steel maker Corus in 2007 for over $12 billion, is trying hard to secure captive raw material linkages to the company, now known as Tata Steel Europe. It does not have any captive raw material support.
Tata Steel Managing Director H M Nerurkar said target has been set by the Group to secure at least half of raw material requirement from captive sources. However, no time-line was set. It plans to acquire a chrome ore mine to source local supplies for a ferro-chrome plant in South Africa.
Tata Steel Europe, the second largest steel maker in the continent, currently has around 18 million tonne per annum capacity. It hopes to produce 15-16 million tonne saleable steel in the current year utilising 80-85% capacity.
The company hopes higher steel demand from auto and engineering sectors; but anticipates construction sector to take more than three years to recover to the pre-crisis level.