Tata Steel will save 1 billion pound from the ongoing restructuring initiatives at its European operations in 2009-10.
Addressing a press conference, B Muthuraman, managing director, Tata Steel said that the company had saved 650 million pound last year.
In the last quarter of 2008, Corus announced strategic measures to improve its competitive position. The key features of the initiative were divestments, asset restructuring, efficiency and overhead review.
Apart from the three strategic initiatives, Corus also has a Fit for the Future programme, which entails restructuring of some of the long products operations. The measures also put 3,500 jobs at risk around the company as a whole.
Muthuraman said, “It was important to have the right number of people for the right amount of production.” Corus’ annual production is around 20 million tonnes and at the beginning of January had an employee strength of 42,000.
Muthuraman said, there were no signs of recovery in Europe and the first two quarters would be difficult. Corus would operate at 67 per cent capacity in FY10. In November, Corus announced reduction of crude steel production Western European operations by 30 per cent.
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Tata Steel was also banking on its raw material acquisitions to improve its cost of production in the European operations. The main projects were iron ore venture in Canada and coal project in Mozambique.
Muthuraman also announced a new iron ore project in South Africa today. The company has entered into a partnership with some South African companies for an operational iron ore mine, Sedipang, having reserves of around 50 million tonnes. Tata Steel would get 2 million tonnes from the mine next year. In 2011, the Canadian iron ore project would yield another 4 million tonnes.
Muthuraman said, India and China were doing better and Tata Steel would produce 20 per cent more and market much more in India. In India, the production plan for FY10 was 7.51 million tonnes, as compared to 6.25 million tonnes in FY09. Despite the slowdown, the company hopes to gain market share, Europe and Indian operations, combined.
As far as expansion plans were concerned, the brownfield expansion at Jamshedpur to 10 million tonnes at a cost of Rs 15,000 crore was on track.
Muthuraman said, 10 million tonnes would be commissioned by April 2011. In Orissa, the greenfield project at Kalinganagar was running behind by two years. Muthuraman said, two events were holding up the project, elections and iron ore allocation. Work would be expedited after the elections. “We are still awaiting iron ore mines allocation,” he added.
For the greenfield project in Jharkhand, Tata Steel has just started procuring land. “We have made an application for iron ore,” he said.