Tata Steel plans to set up sponge iron unit

The Rs 10,700 crore-plus steel giant, Tata Steel, is planning to set up a sponge iron plant with a capacity of around 3 lakh tonne in Jamshedpur.

In a parallel development, the company is also weighing the feasibility of setting up a facility for producing coated steel.

The company has also scaled up its two million tonne expansion plan to 2.4 million tonne, to take its total installed capacity to around 7.5 million tonne by 2007.

Senior company executives said, "We are exploring the possibilities of setting up a sponge iron unit in Jamshedpur. However, as of now the plan is on the drawing board and a decision will be taken on it when the new expansion plan is finalised."

Tata Steel is undergoing an expansion of one million tonne. The company had earlier proposed an expansion of two million tonne by the year 2007.

However, it has now scaled up its expansion project to 2.4 million tonne, with an estimated investment of over Rs 5,000 crore.

Tata Steel executives also said, "We are planning to foray into the coated steel market. We will be looking at setting up plants to manufacture coated steel in Jamshedpur in the near future."

The company has liquid assets worth Rs 2,000 crore which can support any expansion or acquisition plan.

The company is also planning an expansion at its subsidiary, Indian Steel and Wire Products, which it acquired in the previous year. Tata Steel has recently entered into a 49:51 joint venture with a Thailand based company for procurement of limestone.

"Although 70 per cent of our total coal requirements are met by captive sources, we could be looking at similar alliances with coal companies to reduce our raw material costs," company officials said.

The joint venture in Thailand will result into a benefit of $2 per tonne of limestone for Tata Steel.

The company has also announced that it will be setting up a 0.8 million tonne coke plant in Haldia at an estimated investment of around Rs 500 crore.

Meanwhile, Tata Steel and Larsen & Toubro, have formed a joint venture company to build a port at Dhamra. The first phase of the project entails an investment of Rs 1,550 crore.