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| Tata Steel to divert 50% of raw material to Corus |
| Namita Tewari/ PTI / Jamshedpur Aug 06, 2009, 16:05 IST |
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Tata Steel would channelise 50 per cent of its iron ore and coking coal — key inputs for making steel — to its European subsidiary Corus by 2015 in a move aimed at securing raw material for the Anglo-Dutch steel maker and cut operational cost.
The world's sixth-largest steel firm is also looking to save 1 billion pounds at its European operations in 2009-10 by pursuing its cost-cutting programmes — "Weathering the Storm" and "Fit for Future".
"The fundamental thing is our strategy to get raw material license to ensure that over a period of next five-six years, Corus or Tata Steel Europe as it is now called, gets 50 per cent of the raw material," Tata Steel Managing Director B Muthuraman told reporters here today.
The raw material for Corus would come from company's mines in Mozambique, Canada and South Africa besides other places, he said, adding that the initiative would take a few years to complete. The company would continue to scout for more coal and iron ore assets abroad.
"So that is the journey which we have started but this journey will take some years. These are the things which I expect to start flowing in from 2011 onwards and slowly it will pick up and gradually it will grow," he added.
The mines in Mozambique and Canada are likely to be operational by 2011 while the one in South Africa is slated to see the production start by the end of 2010.
Tata Steel had acquired Corus for $12 billion in 2007. Corus needs raw material security for its business as it depends on supply-pacts with mining giants like CVRD.
Hit by the economic crisis and the slump in steel demand and prices, Corus had launched two cost-cutting programmes – "Weathering the Storm" and "Fit for Future" during the last fiscal. The programme also saw job cuts.
Muthuraman said the downturn was the best time for companies to improve themselves and Tata Steel aimed at saving 850 million pounds on 'Weathering the Storm' and another 250 million pounds on 'Fit for Future' by the end of 2009-10.
"When you are in downturn you are more careful about your costs operations... That is exactly what we are doing. We have a programme in Tata Steel Europe 'Weathering the Storm' and we already saved in the second half of last year roughly 730 million pounds."
"This year for the whole of the year our plan is to save 850 million pounds on 'Weathering the storm' which is our strategic response to what the market demands," he said.
On 'Fit for Future', he said, "This year we will save 250 million pounds and on a sustained basis the saving is 500 million pounds on restructuring manpower position."
"This is the time to get sort of fitter. We are looking upon this more as an opportunity. The savings over last year we got was a billion pounds," Muthuraman added.
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