Tata Steel eyes overseas raw material source

Tata Steel has lined up a series of projects in the domestic and international markets in order to own strategic raw material plants.

The company has planned projects for coal in Bangladesh, limestone in Oman, iron ore in Iran and Southeast Asia. This is besides the planned projects in coal and iron ore in the domestic market.

All the raw material projects were close to the locations where the company was looking at setting up steel plants.

T Mukherjee, deputy managing director (steel), Tata Steel, said there were large coal deposits to the northwest of Bangladesh and the company was in an advanced stage of negotiations for it.

In Oman, the company was looking at limestone deposits as also iron ore in Iran but nothing had been finalised yet. Mukherjee said, "We are still looking at it." Tata Steel was eyeing lease of the raw material deposits.

The move was in tandem with the company's strategy of having primary steel making in countries rich in iron ore and coal and gas. Tata Steel had lined up a 2.4 million tonne plant in Bangladesh and a 5 million tonne plant in Iran.

Mukherjee said the company was in an extremely advantageous position as far as raw materials were concerned and would continue to leverage it. He added raw materials accounted for 50 per cent of the cost of production.

The company was looking at insulating its margins from rising input costs, which had hit steel makers without captive raw materials.

Last year, the cost of raw materials reached historic peaks with iron ore increasing 71 per cent, hard coking coal 119 per cent and zinc 43 per cent.

The company was also in discussions with an Australian company for a stake in a coal mine project. The project would facilitate access to three independent ports, Mukherjee said.

Tata Steel has two collieries in West Bokaro and Jharia in Jharkhand. West Bokaro is an open cast mine while the Jharia unit is underground. Expansion in open cast mines was in the offing, Mukherjee added.

The iron ore units are located in Noamundi, Joda and Katamundi in Jharkhand and Orissa.