Tata To Send Mozambique Coal To Europe

Benga Coalfield Inaugurated

Tata Steel is expected to start sending coal to its Corus operations in Europe from a new $1 billion coalfield in Mozambique by the end of this year.

The groundbreaking ceremony was attended by Mozambique’s president Armando Emilio Guebuza, who officially inaugurated the Benga coal project in the country’s Tete province on Tuesday.

Tata has a 35 per cent stake in the project, with the remainder held by an Australian company, Riversdale Mining, in which Tata has a 21 per cent stake.

Tata has the right to buy 40 per cent of the mine’s two million tonnes a year initial output, 85% of which is good quality hard coking coal with the remainder low ash thermal coal. Production is expected to rise to almost 8 million tonnes over the next few years. The same level of production is likely to continue for 25 years at least.

Ferro Alloys Corporation Looking For Strategic Partners

Steelmakers Circle Ferrochrome Manufacturer

India’s Ferro Alloys Corporation is looking for strategic partners as the company looks to move up to the next stage.

Joint managing director Ashish K Saraf admitted to Indian TV station NDTV that his company is looking for a tie-up and that preliminary approaches have been made to steelmakers Baosteel, Posco, Vedanta, JSW, Tata Steel and Amtek Auto.

"We are actively looking to bring in strategic investors into Ferro Alloys. It could be Tata Steel, Bao Steel etc, anyone who has capacities and requirement for ferro-chrome," Mr Saraf told NDTV.
The company has also given a mandate to E&Y to look for international partners and sources suggest that part of the mandate is a sale of up to 75% of the equity in Ferro Alloys Corporation and 47% in associated company FACOR Alloys. These are the stakes held by the company’s promoters with the balance held by financial institutions, corporate bodies and the general public.

Ferro Alloys Corporation has significant chrome ore mining assets including its complex in Orissa, and this is what makes the company so attractive to steelmakers
Sources suggest that any bid for Ferro Alloys is likely to be in the region of Rs40-45 a shares – a 50% premium over the current market prices – which would value the promoter holding at around Rs600 crore (US$135 million).

Indian Steel Prices Set To Rise

Indian steel prices look set to rise next month as rising raw material prices look set to take effect. JSW, Tata and SAIL all look set to increase their prices by about 10-20% according to some industry sources.

Coking coal prices have risen by over 50% over the past few months. BHP Billiton recently agreed a 55% rise with the major Japanese steelmakers for the April-June quarter.

Seshagiri Rao, Joint MD and group CFO of JSW Steel, told the Times Of India that adecision will be taken next month. "We are keeping a watch on the international pricing scenario. We will revisit our pricing structure next month." Mr Rao has also been quoted as saying: "Cost pressures are very strong at the moment. Prices are not affordable... in the short-term we have to pass through this cycle."

Tata Advisor Calls For Ban On Iron Ore Exports

A leading advisor to India’s Tata Steel has called for exports of iron ore to be banned.

Addressing the Global Steel Conference in Goa, Amit Chatterjee, advisor to Managing Director of Tata Steel Ltd said “Increasing exports of iron ore is a disturbing trend. Exports should be banned. We don’t need to export something which God has given to us.” He added “Restrict export of higher grade iron ore. Lower grade is a different issue.”

Mr. Chatterjee also suggested that “India will have a greater usage of steel in general. There will also be increased usage of steel in construction and boom in automobile industry will add to the demand,” Mr. Chatterjee. “Every car maker in the world is in India and more are coming (leading to increase in steel demand),” he stated.

Mr. Chatterjee pointed out India’s advantages of low cost iron ore and lower labour costs and projected that India’s steel manufacturing capacity would touch 100 million tonnes by 2012; however he said that raw material supply, environment responsibility and a lack of qualified personnel are big challenges ahead for the industry.

“Youngsters prefer IT to steel industry as it pays well. Working in steel industry is not considered fashionable,” he said.

Senior Management Changes At Tata Steel

India’s Tata Steel has reshuffled a number of top management posts in both its domestic and overseas operations.

B. Muthuraman is now the vice-chairman of Tata Steel and having resigned as the managing director of Tata Steel in September, he has resigned from the boards of several subsidiary companies. His replacement as MD, Hemant Nerurkar, has stepped down as the chairman of pig iron manufacturer Tata Metaliks Ltd and Jamipol, a three-way joint venture with a German and a Bhutanese company. In the Tinplate operation, Mr Nerurkar has quit from his post of a director, however he remains chairman of Hooghly Met Coke, a wholly owned subsidiary of Tata Steel, and TM International Ltd, in which German IQ Martrade and Japan’s NYK are partners.

Sources have indicated that Hooghly Met Coke is likely to be merged with its parent company, which is the only buyer of its products.

It is believed that the company’s senior management want Mr Nerurkar to focus more on the core operation and overseas subsidiaries (Corus, NatSteel and Tata Steel Thailand) and leave the management of the domestic joint ventures and subsidiaries to the executives at the second level.

India made up 22 per cent of Tata Steel’s turnover in the second quarter of this fiscal year making a profit of $188 million against a loss of $788 million by Tata Steel Europe.

In managerial changes further down the company Tata Steel. Group chief financial officer Koushik Chatterjee has become the chairman of Tinplate and Tata Metaliks. Senior vice-president such as Anand Sen has been appointed chairman of Tata Ryerson and Varun Jha is now the chairman of Jamipol.

A.D. Baijal, Tata Steel group director (global mineral resource), is due to retire on April 1 and his replacement as chairman of Tata Sponge is likely to be Partha Sengupta who will leave the corporate services division to take charge of raw materials. Sanjeev Paul will step down as MD of Jusco to take over corporate services. Anand Sen will take over shared services, leaving flat products for T.V. Nardendran. Hridayeshwar Jha, who was in charge of long products, will take over the reigns of the Orissa project from B.K. Singh, who retires on April 1. Bimalendra Jha will be in charge of long products, A.M. Mishra for CSI and industrial relations, and Om Narayan for special projects.

In all no fewer than eight Vice-President jobs have been changed in the reshuffle.

Tata To Revive Production Capacity At Corus

Tata Steel today said its European subsidiary Corus will be able to meet full capacity utilisation by the end of the current fiscal, riding on revival in global demand.

Corus, which had cut production capacity of its mills by as much as 50 per cent amid the demand slump last year, has currently revived the utilisation of its mills to 80 per cent.

"In October, the capacity utilisation had touched 80 per cent. It should be 85 per cent by the end of November and 100 per cent by the end of this financial year," Tata Steel Vice-Chairman B Muthuraman said on the sidelines of CII Steel Summit here.

Corus produces about 20 million tonnes of steel per annum.

"Demand is coming back in the west," he added.

Globally, steel producers have started reviving their production capacities with the rise in demand for their products. ArcelorMittal had revived the capacity utilisation of its mills to about 61 per cent in the past three months and aims to take it up to 70 per cent in the ongoing quarter.

However, the world's largest steel maker had warned against the over production at Chinese still mills and the resultant influx of cheap steel goods, especially in the South Asian market.

But, Muthuraman said the production by Chinese steel mills is only meant to feed its domestic market and there is no threat of dumping of cheap steel items.

"Chinese steel production will meet its internal demand, which is high," he added.

Source: Business Standard

Tata Steel Profits Down 47 Per Cent

Tata Steel on Wednesday reported a 47 per cent drop in net profit for the quarter ended June 30, 2009 at Rs 789.83 crore as compared with Rs 1488.40 crore in the same quarter of previous fiscal.

Total income of the largest private sector steel producer during the latest quarter plunged to Rs 5,661.89 crore from the comparable quarter in 2008-09 at Rs 6165.14 crore. This, however, does not include the consolidated financials of Tata Steel — including Tata Steel Europe (formerly Corus U.K.) – whose June quarter figures would be published by the end of August 2009.

Tata Steel’s Managing Director B Muthuraman in his press briefing here maintained that Europe operations (Corus) for the latest quarter was similar to the last quarter of FY’09 in terms of sales volume-wise or value-wise.

Ascribing the reasons for decline in the net profit for the latest quarter, Muthuraman cited two reasons. One is the increase in the raw material price, especially coke, which accounted for 40 per cent rise in the incremental cost of raw materials, while other 60 per cent rise in the cost was due to rise in volumes of production.

Explaining further, he pointed out, that the cost of coke during Q1 this fiscal was $300 per tonne versus Q1’09 at $75-80 per tonne, while the raise of raw material in the latest quarter went up by about Rs 2000 per tonne of steel.

However, with the merger of Hooghly Met Coke & Power Company Ltd (HMPCL), a wholly owned subsidiary of Tata Steel being merged with the latter – as approved by both entities at their respective board meetings on Wednesday – with all assets and liabilities, Tata Steel would be able to make significant cost saving this fiscal with coke to be available in-house at par value.

Muthuraman pointed out adding: “Profitability will improve as raw material prices are easing and the full impact of capacity additions will be seen in this fiscal.”

During the quarter under review, the company’s steel output rose 31 per cent to 15.42 lakh tonnes versus 11.86 tonnes in Q1’09, while exports value-wise slipped to Rs 334.95 crore in the first quarter of the current fiscal from Rs 868.13 crore in the same quarter of last fiscal.

On the demand situation in macro terms, Tata Steel MD maintained that global steel demand was down 30-35 per cent on YoY (year-on-year) basis, though India and China continued to remain positive stories. Tata Steel, he continued, had gained in market share and that India saw a 6 per cent demand growth.

Tata Steel in its notes to accounts pointed out that an exchange gain of Rs 17.10 crore has been adjusted to the cost of capital assets during the current quarter and Rs 3.92 crore being amortization of cumulative net loss has been charged to Profit & loss account.
Had the company followed the previous practice of recognizing the translation gain or loss in the P&L account, the net profit for the latest quarter would have been higher by Rs 277.06 crore, it said.

Source: Deccan Herald

Tata Shelves Liberia Iron Ore Bid

Tata Steel said on Monday that it has shelved its plans to re-bid for the USD 1.6 billion Western Cluster iron ore project in Liberia.

"The company has decided not to participate in the re-bid for the property," a Tata Steel spokesperson told the Press Trust Of India.

Asked about the reasons for it, he said there was nothing specific.

Industry sources, however, said the unpleasant experience the steel major had during the initial course of bidding for the Western Cluster mineral assets when they were charged of "acts of impropriety", have culminated into its walkout.

In 2008, the world's sixth largest steel producer was barred from bidding for the project for its alleged acts of impropriety, as reported in a section of the media. The Liberian government later absolved the company of the charges and allowed it to re-bid.

In response to Tata Steel&aposs letter of remonstration against media reports, Liberia's Ministry of Justice informed that investigations did not show the company's involvement in acts of impropriety as these have not been substantiated by the investigation panel of the country&aposs Public Procurement and Concession Commission.

The Western Cluster project consists of three deposits and two non-functional mines. Tata Steel was considering to acquire the property to feed the iron ore requirement of its European arm Corus.

Source: Indopia

Tata To Restructure Corus Operations

The global slump in steel prices and demand has prompted Tata Steel to consider restructuring the continental European operations of Corus, the Anglo-Dutch steel major it acquired in 2007 for $12 billion.

The focus of the review is Corus’ plants in Spain, France and the Netherlands, which could include selling these units if the need arises. Tata Steel's consolidated profits fell 48 per cent to Rs 732 crore in the quarter ended December, after Corus faced a drop in sales (the company does not give Corus' results separately).

Corus, which has an annual production capacity of 20 million tonnes, has plants in the UK, the Netherlands, Germany, France and Belgium.

This week, the company suffered a setback after an Italian buyer, Marcegaglia, backed out from a deal to buy its Teesside plant in northern England, saying the $480 million deal would financially stretch the company.

An e-mail sent to the company spokesperson on Wednesday did not elicit a response.

To limit losses, Corus has already decided to divest in downstream businesses. Briand Investments, an affiliate of UK-based investment group Klesch, had agreed to acquire Corus' aluminium smelters at Voerde in Germany and Delfzijl in the Netherlands.

The company has also closed the three service centres in the UK. As part of restructuring its building systems division, it has closed units in south Wales and relocated the facilities to Shotton in north-east England.

Tata Steel, which has about $9 billion debt in its books, is also looking to roll over the $4 billion of debt it raised to buy Corus. Sources said the company planned to extend the loan repayment period for three years to help Corus weather the downturn. Tata Steel has to repay $795 million in 2009-10 and $1.3 billion in 2010-11; however, the company is free from repayment until December 2009.

“The company may use part its $1.9 billion reserves for the loan repayment, but that will adversely affect its expansion plans in India. The company requires $1.2 billion for its capital expenditure during this fiscal,” said a Mumbai-based analyst.

Corus, the analyst added, has already cut 40 per cent of its production after the demand slump, so cash flows from Europe also will be lower. “The restricted cash flow will affect Corus' plans to acquire iron ore and coking coal mines for raw material security,” said a Mumbai-based analyst.

The Tata Steel and Corus managements have already gone through some top-level changes after Philippe Varin resigned as chief executive to head French car maker PSA Peugeot Citroen. Kirby Adams, former chief executive of BlueScope Steel in Australia, has succeeded Varin.

Source: Business Standard

Tatas Canada JV May Start Production In 2011

The Tatas and the Canadian iron ore prospecting company, New Millennium Capital Corporation, propose to start mining and direct shipment of ore to Corus from April-June quarter of 2011.

The Canadian company hopes to complete the feasibility study for the project in July-September quarter this year. The Tatas are scheduled to approve the project, known as direct shipping ore (DSO) project, by December 2009.

The Tatas, already having 19.9 per cent stake in New Millennium, are to start funding for the project once the necessary approvals have been obtained, most probably by the last quarter of the current year (2009). They have also committed to buy the total production from the project. New Millennium’s ore deposits are located in Newfoundland, Labrador and Quebec.

To aggressively advance the DSO project, the Tatas, who will be the strategic, technical and commercial partner, have moved Mr Suren Rao, CEO of Tata’s Canada project, to New Millennium’s head office in Montreal.

In a recent filing to stock exchanges, New Millennium has said that several timelines in cooperation with Tatas are being set. The Tatas, it is learnt, have proposed a special steering committee of six representatives, three each from Tatas and New Millennium, for the purpose of optimising some of the pre-feasibility assumptions relating to the wash plant process and ore handling system.

The optimisation studies, which could significantly improve the already robust — 39 per cent — internal rate of return, is expected to take about two months and result in a DSO feasibility study completion in the third quarter this year.

New Millennium, currently negotiating a draft joint venture agreement with Tata Steel Global Mineral Holdings Pte Ltd, expects signing of the agreement before June-end. The company is working on acquiring construction permits for DSO project and submission of the final environmental impact statement.

In another project of New Millennium — LabMag — in which Tatas have an “exclusive right to negotiate and settle a proposed transaction”, the Indian conglomerate has begun discussion to determine the project’s development possibilities.

A due diligence exercise, which focuses on reduction of the project costs, is also on the anvil, New Millennium stated. The feasibility study for LabMag project may begin after July this year.

Source: The Hindu

Tata Cleared To Bid For Liberian Iron Ore Project

The Liberian government has cleared Tata Steel of financial wrongdoing, clearing the way for the Indian firm to bid for a $1.5 billion iron ore project in the West African country, it said on Thursday.

Last year Liberia disqualified the world's sixth biggest steelmaker from participating in a bidding round for the Western Cluster deposit. It cited "acts of violation" in an earlier bidding process which it said may have been compromised by "external influence or impropriety".

The Justice Ministry said on Thursday that a subsequent investigation had exonerated Tata.

"The government wishes to inform the company that the disqualification placed on it is hereby lifted," it said in a statement.

"Tata Steel is now eligible to fully participate in the re-bidding process for the Western Cluster iron ore deposits."

The bidding round is scheduled to close on May 15 and mining industry officials said 9-10 firms had shown an interest so far.

Since winning post-war polls in 2005 as Africa's first elected female head of state, Liberian President Ellen Johnson-Sirleaf has vowed zero tolerance for corruption as she attempts to rebuild the country after a 1989-2003 civil war.

Her government has looked to foreign investors to boost the reconstruction effort, including exploitation of Liberia's estimated 3.4 billion tonne iron ore reserves -- top in Africa and seventh in the world. Several mining projects in Africa and elsewhere have been delayed or scaled down in the past six months as metals prices have fallen dramatically. Industries that use steel and metals are among the worst hit by the global financial downturn.

In a separate iron ore project, Arcelor Mittal, the world's largest steelmaker, is developing a huge, high-quality iron ore deposit in northwest Liberia with reserves estimated at 500 million tonnes.

Before its civil war, Liberia was the world's fifth largest producer of iron ore.

SourcE: Reuters

Tata Metaliks Wins Maharahstra Prospecting Licence

India's central government has today approved a prospecting license for Tata Metaliks for iron ore mines in Maharashtra state.

" Government of Maharashtra has conveyed approval of the Central Government. For grant of prospecting license for iron ore over an area of 154.80 hectares in village Dongarpal, Sindhudurg in Maharashtra for a period of two years," the company said in a filing to the Bombay Stock Exchange.

Tata Metaliks is India's largest pig iron producer and has plants at Kharagpur in West Bengal and Redi in Maharashtra with a combined annual capacity of 650,000 tonnes of pig iron.

It is also in the process of setting up a 6,000,000 tonne sinter plant at Kharagpur. In Karnataka it has received state go-ahead for an iron and steel plant in Haveri.

The proposed sinter plant is expected to commission by March 2010 while the time-frame for the steel plant has not yet decided.

Source: Indopia

Profits Down 56 Percent At Tata Steel

Tata Steel Ltd the world's sixth-largest steel maker, has reported a 56.4 percent fall in December quarter profits from its Indian operations as volumes dropped.

The company, which earlier in the week shed 3500 jobs at its Corus subsidiary in Europe, said standalone net profits fell to 4.66 billion rupees ($95.5 million) for the fiscal third quarter ended December, down from 10.7 billion reported a year earlier.

Net sales fell to 47.36 billion rupees from 49.28 billion.

Tata Steel mines its own iron ore and buys a third of its coking coal needs; but long-term coking coal prices surged to $300 a ton, while iron-ore prices almost doubled in the year started April 1.

Deepening concerns about the economic slump are lowering demand for steel worldwide and analysts suggest that this is unlikely to improve this quarter with prices showing no signs of improvement.

Changes At The Top At Tata Steel

Leadership changes are in the offing for Tata Steel, India’s most profitable private company, with deputy chairman Jim Leng becoming chairman of multinational mining and resources group Rio Tinto and managing director B Muthuraman retiring in September this year.

The chief operating officer H M Nerurkar is believed to be the front-runner for the post of managing director, said sources close to the Tata group. Another name doing the rounds for the post of managing director is Philippe Varin, the outgoing chief executive of Corus and of Tata Steel Europe. Varin had recently decided to step down from his position on April 6, 2009, leaving the opportunity to Kirby Adams. Kirby joined Corus after retiring from Melbourne-based BlueScope Steel as its managing director and chief executive officer.

However, sources said, one of the reasons for Varin’s exit might be possible differences with the Indian management over job losses in Corus operation. Recently, Corus cut 400 jobs in its distribution business, in the wake of the global economic downturn.

A Tata Steel spokesperson said the company did not respond to media speculations on internal matters relating to the company.

In an official announcement on Varin’s resignation, Tata Steel had said, “When Tata Steel acquired Corus, Varin had agreed to continue as chief executive for at least two years. Now that he has met his commitment, he has decided to seek a new challenge. In order to ensure a smooth transition of executive leadership in Corus, Varin will continue to serve on the boards of Tata Steel Europe and Tata Steel as a non-executive Director.”

Post acquisition of Corus in 2007, Varin had worked closely with Muthuraman to successfully integrate the Anglo-Dutch steel maker with Tata Steel.

Leng is stepping into the shoes of Paul Skinner at a time when Rio Tinto is eliminating 14,000 jobs, cuts capital spending and plans to sell assets as the global downturn hits demand for commodities. Leng is expected to take over the responsibility at the world’s third largest mining company in April.

Leng has held the position of non-executive deputy chairman since Corus was acquired by Tata Steel. He is also the chairman of the Doncaster Group and a non-executive director of Alstom and Hanson. He was chief executive of Laporte from 1995 until June 2001. He retired as the chairman of IMI in May 2005 and as a non-executive director of Pilkington in June 2006.

“We can only state that Varin has decided to step down from the post of CEO of Corus and Kirby Adams will be taking up the position of CEO of Corus from April 2009. Jim Leng has decided to accept the position of chairman of Rio Tinto. His status on the boards of Tata Steel and Tata Steel Europe remains unchanged. We would not be able to respond to any other query,” said the spokesperson.

After 38 years of service with Tata Steel, Nerurkar is currently the chairman of Tata Martrade International Logistics, Tata Metaliks, Hooghly Met Coke & Power Company, JAMIPOL, vice chairman of Tata Steel (Thailand) Public Company in Bangkok, according to the Tata Steel website.

Source: Business Standard

Tata Steel To Become Partner In KeMag

Indian steel producer Tata Steel plans to become a partner in the Canada-based New Millennium Capital Corp’s $4-billion KeMag property, which is said to have iron ore reserves in excess of two billion tonnes.

A Tata Steel spokesperson said, the company would engage in the KeMag property in due course as the pre-feasibility study has just been completed. However, for Tata Steel Global Mineral Holdings, an indirect wholly owned subsidiary of Tata Steel, which picked up a 19.9 per cent stake in New Millennium, a bankable feasibility study on the direct shipping ore (DSO) project is a priority.

The Tata Steel-New Millennium deal forged last year has three components:

- First, Tata Steel would become New Millennium’s largest shareholder with a 19.9 per cent stake.

- Second, on completion of a feasibility study by New Millennium for its DSO project, the Indian steel major would have 180 days to acquire an 80 per cent interest in the project. It would furthermore invest up to a total of $300 million in the project to start production. Tata Steel has committed to purchase 100 per cent of DSO’s ore production at the prevailing world prices during the life of the mine.

- Third, the Indian major has an exclusive right to negotiate a proposed transaction in respect of the LabMag project until June this year. The LabMag project has indicated reserves of 3.6 billion tonnes.

The KeMag project was not part of the deal with New Millennium. “Our immediate priority is to ensure that the DSO feasibility study is completed as soon as possible and the production starts at the earliest,” said a Tata spokesperson.

According to the pre-feasibility study, the KeMag project will have an initial capital cost of $3.8 billion and a working capital need of $26.4 million. The net present value of the project, before corporate and mining taxes, is $7.3 billion.

The next stage for the KeMag project is to initiate a feasibility study, which if successful would lead to project financing in 2011 and a production start by 2014.

New Millennium is Tata Steel’s third overseas iron ore venture. The company has a joint venture with Sodemi, a government-owned mineral development company in Africa, and a greenfield steel project in Vietnam linked to iron ore deposits. Also, Tata Steel is in the running for a $1.6-billion iron ore project in Liberia.

With a 28 million tonnes capacity, Tata Steel has set a target of 40 per cent raw material security over the next 3-5 years. The group meets all its iron ore requirements for its domestic operations from its own mines. Currently, the group, which includes Corus (20 million tonnes capacity) and other foreign acquisitions, has a raw material security of 22 per cent only.

Source: Business Standard

Tata Receives Maharashtra Iron Ore Prospecting Licence

Tata Metaliks has received approval from the Indian government for a prospecting license of iron ore mines in the country's Maharashtra state.

The country's largest pig iron producer has been allotted the prospecting license for 154.8 hectares at Dongarpal-Sindhudurg in Maharashtra, a senior official in the Mines Ministry said.

Tata Metaliks has plants at Kharagpur in West Bengal and Redi in Maharashtra with a combined annual capacity of 650,000 tonnes of pig iron, which is used in the foundry industry and steel-making industries.

Should Tata receive the mining lease for the Maharashtra site, it would utilise the iron ore for its plant at Redi, a Tata Metaliks official said.

Tata Metaliks is in the process of setting up a 6,000,000 tonne sinter plant at Kharagpur. In Karnataka it has received the state government's go-ahead for setting up an iron and steel plant in the Haveri district.

The proposed sinter plant is expected to commission by March 2010 while the time-frame for the steel plant is not yet decided. For the sinter project, the company has roped in TCE Consulting Engineers Private Ltd as the consultant.

Source: The Hindu