Tata Steel may go it alone in South Africa

Tata Steel may go solo for its ferro chrome venture in South Africa. The company had initially planned a joint venture with the Industrial Development Corporation (IDC) of South Africa for a 1.2 lakh tonne per annum plant at Richard's Bay.

Sources close to the development said, "Although the IDC is still interested in partnering with Tata Steel, there is a high possibility that it (Tata Steel) will go solo. A final decision will, however, be taken in the next few months."

A steel industry analyst said, "When Tata Steel had announced the project two years ago, steel and associated industries were not doing well. But given the present demand, it will be beneficial for Tata Steel to run the show all by itself."

The company is also planning to double the capacity of the project in the second phase to 2.4 lakh tonne per annum.

Tata Steel is awaiting environmental clearances from the South African government for starting commercial production. The company has already been conducting technical trials at the proposed site.

The project is expected to be completed by March 2005. Sources, however, said that there could be a delay of some months.

"The project has been delayed for some months as Tata Steel was developing an indigenous technology for the project. This is expected to bring down the total project cost," sources added.

The project cost has also been revised and is now estimated at around Rs 450 crore from the earlier around Rs 250-300 crore.

"The cost of setting up the plant has also scaled up a bit owing to the steep rise in copper and aluminium prices. Because of the new technology, the total cost has not increased substantially," sources said.

Crisil Marketwire adds: Tata Steel on Monday said the acquisition of Singapore-based NatSteel Asia Pte Ltd will help it to look for more acquisitions and growth.

"It is a strategic acquisition, since it gives us a presence in several countries, all of which have strong steel demand," said B Muthuraman, managing director, Tata Steel.

"This will also provide us with a platform for more acquisitions," added Muthuraman. Without specifying any specific regions as targets, Muthuraman said, "We will make acquisitions either in areas we can make cost-competitive steel or where we can finish and market that steel."

Steel consumption in the last two decades has moved from the developed world to the developing countries, especially south Asia.