Three Indian Steel Companies Announce Investment Plans Part One

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TC Malhotra contributes to MetalMiner from New Delhi.

Encouraged by rising steel demand in the domestic market and hopeful of expanding further in the global market, three big Indian steel producers – Tata Steel, Essar Steel Ltd, and NMDC have each announced their development plans.

Tata Steel, one of the world’s most geographically diversified steel producers, will increase production of auto-grade steel by 20 percent to 1.2 million tons this fiscal year. Realizing the potential in the auto segment and rising demand numbers to support that assertion, Tata Steel expects to continue a similar capacity increase in auto steel production over the next few years.

According to the Society of Indian Automobile Manufacturers (SIAM), after posting good volume growth of 30% in 2010, the Indian automobile industry should see see only moderate growth in 2011-12 due to rising interest rates and commodity prices, along with the phased out impact of Ëœlow base effect’. Despite this, the industry expects a growth rate of 15-18% in the coming financial year.

Another private sector player, Essar Steel Processing and Distribution (ESPD), a part of steel major Essar Steel Ltd, announced the commissioning of a service center facility in Dubai. The Dubai facility will serve as the third after those in the UK for the European region and in Indonesia, catering to the East Asian market.

In the meantime, the state owned NMDC, the country’s largest iron ore producer, and Russian steel maker OJSC Severstal will invest Rs 90 billion (approx $ 2 billion) to set up a five-million-ton steel plant in Bellary, in the south Indian state of Karnataka. NMDC has said in an official statement that the plant will have an initial capacity of 2 million tons per annum expandable to 5 mtpa. Construction of the plant scheduled to begin in 2012 will take three years to complete and will spread over 2,800 acres. According to the statement, the two had signed an agreement last December for a 50:50 joint-venture. The joint venture would have its captive coking coal mining subsidiary in Russia and iron-ore mining subsidiary in India to ensure long-term supply of these raw materials.

Severstal will share its latest technology for the proposed plant, with an emphasis on producing superior grade steel used in the automotive sector. Severstal, among the world’s top 10 steel makers, operates steel plants in Russia, the US and Europe.

The Indian steel industry has had tremendous growth in terms of production, capacity utilization, exports, and consumption, which has made India a major steel player. In 2010, India had become the fourth largest producer of crude steel in the world and will likely become the second largest producer of crude steel in the world by 2015.

We will continue this story in a follow-up post.

–TC Malhotra

 

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