Tata Steel makeover move SAMBIT SAHA

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Tata Steel makeover move

SAMBIT SAHA

Nerurkar: Strategic shift Jamshedpur, March 7: After pioneering steel making in India more than a century ago, Tata Steel now aspires to turn itself into a metal-and-mining company. The world's seventh-largest steel maker wants to explore merchant mining, digging the earth for raw materials and selling to end users, adding a dimension to its portfolio of businesses. "I think there are lots of in-house expertise (mining) and those should be utilised. Right now, we are not looking at it as a revenue stream. But tomorrow, if we are able to manage Tata Global Minerals well, we get some deposits which we can market," Hemant Nerurkar, managing director of Tata Steel Ltd, said. The company has so far focused on mining for its own use. Tata Steel has iron ore, coal and limestone mines in states such as Orissa and Jharkhand for its Jamshedpur plant. The company, through its wholly owned subsidiary Tata Global Minerals, also part owns two mining projects in Mozambique and Canada for coking coal and iron ore, respectively. Nerurkar said Tata Steel might also partner group firms such as Tata Power for coal blocks. He pointed out that merchant mining could emerge as an opportunity when the company started executing capital-intensive projects in Canada. "To make a project viable of that nature, we may have to produce 10-15 million tonnes of iron ore but we can't use all of that. So, we may then look at selling some on merchant basis to others," he said. Tata Steel is exploring the feasibility of developing two low-grade iron ore deposits in Canada having billion tonnes of reserves. The initial feasibility report could come within the next six months. It is partnering New Millennium Capital Corp for the project that will involve carrying the ore nearly 600 kilometres to the port. To make the project successful, the company needs to produce in large quantity, more than that may be required to feed its European businesses across the Atlantic in the UK and the Netherlands. London Stock Exchange-listed FTSE 100 firm Vedanta, owned by Anil Agarwal, and AV Birla Group are the two other major entities from India that have both metal and mining in their business portfolios. Industry observers said mining on a standalone basis could provide a hedge against the metal business of Tata Steel since it would be a new asset class even though the two were inter-linked. Vedanta is involved in merchant mining through Sesa Goa (iron ore) and copper, while it processes metals such as aluminium and zinc. AV Birla Group's Essel Mining is involved in merchant mining, while Hindalco is one of the world's largest processor of aluminium. Plans for Corus Nerurkar said Tata Steel Europe, formerly Corus, might start exporting high grade alloys to India, which should result in higher capacity utilisation in the UK and Netherlands. Opportunity exists for Corus in some items that are not made in India such as steel for transformers and skin panel for high-end cars.