Tata Steel evinces interest to renew pact with NMDC

Previously, a 2 mtpa plant near NMDC's upcoming steel plant was subsequently mooted, but failed to materialise

Tata Steel has evinced interest in renewing the pact that it had signed with NMDC in 2010 for exploring possibilities of entering into a number of joint ventures for acquisition of mines and setting up steel plants.

"The memorandum of understanding between Tata Steel and NMDC lapsed after two years on January 21 this year. NMDC had communicated to Tata Steel four times before the lapse of MoU. Now, Tata Steel is responding with an interest to renew it," a source in the steel ministry said.

When contacted, a Tata Steel spokesperson said, "We never closed the discussions". An NMDC official said the state-run iron ore miner would review the proposals of Tata Steel before signing on the dotted lines this time.

Tata Steel and state-run iron ore miner NMDC had entered into an MoU in January 22, 2010, for exploring possibilities of entering into joint ventures for the purpose of acquisition, exploration and development of mines, extraction and processing of minerals and setting up integrated steel plants.

"Tata Steel and NMDC plan to jointly address mining and steel-making opportunities. The two companies will set up a working group to explore the areas of cooperation and will submit its report to a steering committee. Thereafter, a decision to enter into joint ventures will be taken," the MoU had envisaged.

Though a proposal to set up a two million tonne per annum (mtpa) plant near NMDC's upcoming steel-manufacturing facility in Chhattisgarh was subsequently mooted by the two companies, but it failed to materialise due to various reasons.

The agreement between NMDC and Tata Steel was supposed to be beneficial for both as the steel maker could benefit a lot in the relam of iron ore while NMDC would have been richer in experience with Tata Steel's expertise in steel making.

NMDC is building a three mtpa steel plant at Nagarnar in Chhattisgarh with an estimated cost of Rs 15,500 crore and has also signed an initial pact with Russia's Severstal to set up a three mtpa plant in Karnataka.

On the other hand, Tata Steel is also expanding its steel making capacity in Jamshedpur by three mtpa from 6.8 mtpa now. The first phase of its proposed six mtpa greenfield plant at Kalinga Nagar in Odisha would be ready by March 2014. It has recently announced plans to plans to set up a Rs 30,000 crore steel plant in Karnataka.

Globally, Tata Steel has 27 mtpa steel making capacity.