Australian steel giant eyes India growth with Tata

Australia’s largest steel maker, BlueScope Steel, currently in the process of restructuring its businesses in the home market, has identified India as a growth centre.

Over the next couple of years, its equal joint venture with Tata Steel, Tata BlueScope Steel, will achieve a turnover of Rs 2,000-2,500 crore from its just launched mid-stream coated steel facility at Jamshedpur and three downstream manufacturing facilities at Bhiwadi (Rajasthan), Pune (Maharashtra) and Sriperumbudur (Tamil Nadu). “India is an economic powerhouse and there are true opportunities here,” BlueScope Steel Managing Director and Chief Executive Officer Paul O’ Malley, said, at the launch of the new facility on Tuesday.

In the first half, BlueScope Steel posted a net loss of A$530 million, while the Asian operations delivered an underlying A$47 million Ebit (earnings before interest and taxes). The company had mentioned in results announcement last month that the Asian operations were consistently delivering good returns on invested capital. The company has significant operations in China, as well.

BlueScope Steel, which has already halved steelmaking capacity in Australia, is not looking to set up a blast furnace or an upstream steel making facility in India. “We will buy the steel from Tata Steel,” Malley said.

The investment in the new facility, having a metallic coating capacity of 250,000 tonnes and paint line capacity of 150,000 tonnes, is about Rs 880 crore. The ramp-up time will be about 11 months. Asked whether other facilities from the Tata BlueScope stable were in the offing, Malley said, over the next two years the focus would be to fully utilise the existing facilities, and thereafter, plans could be reviewed.

The coated steel business will manufacture and sell metallic coated and pre-painted steel, for building and construction industry. It will offer premium brands such as Colorbond (pre-painted steel) and Zincalume (metallic coated) steel.

So far, Tata BlueScope Steel had to rely on coated coils from Thailand for downstream facilities that have a turnover of around Rs 550 crore, but the new facility will now cater to its needs. “We will not have to pay duty and we will also save on freight cost,” Tata BlueScope Steel Managing Director Harish Pathak, said.

In the colour-coated market, Tata BlueScope has a 17-18 per cent share. The market is growing at 15 per cent and the total size of the industry, which is still nascent, is about 450,000 tonnes.