http://www.finanznachrichten.de/ext/goto.asp?id=9586327Tata Steel seeks more Australian ventures
SYDNEY (Reuters) - India's Tata Steel Ltd can no longer supply enough of its own raw materials as its steel making capabilities soar, and it will seek more joint ventures with Australian mining companies to make up the gap.
Tata Managing Director B. Muthuraman said in an interview with Reuters on Friday that its self-sufficiency in raw materials such as iron ore and coking coal had ended after it bought European steel group Corus for $12.9 billion this year.
"Tata Steel will form more joint ventures in Australia to secure additional materials sources," Muthuraman said. The Corus acquisition made Tata the world's sixth-biggest steel company, able to churn out 28.1 million tonnes of crude steel a year.
Tata used to supply up to 80 percent of the raw feed needed by its mills from its own mines. With Corus in its fold, that figure has fallen to only about 25 percent.
Australia, with its vast reserves of iron ore, coal and other minerals, is increasingly becoming a quarry for Asia's fast-industrialising economies.
As more mines open up across Australia, resource-hungry companies such as Tata Steel are vying with Japanese, Russians, Ukrainians, Chinese and others for partnerships with local prospectors.
Tata Steel said earlier on Friday it would pay A$100 million ($88 million) to take 35 percent of a coal project to be set up in Mozambique with Riversdale Mining Ltd. Muthuraman was in Sydney for the signing of the deal.
"For the last 100 years we have been a fully integrated company, so holding our own raw materials sources is important to us," Muthuraman said. "Therefore we will see more forays into securing more of our raw materials in the future."
Iron ore prices have galloped higher for five straight years and this year are forecast by Australia's Macquarie Bank to rise another 50 percent or so as mills compete for limited supplies from miners such as Brazil's CVRD and Australia's Rio Tinto and BHP Billiton.
The price of coking coal, also integral in steel making, could rise around 50 percent this year, analysts have said, while Muthuraman sees steelmakers having to pay more for raw products for a least another three or four years.
Muthuraman said the investment in Riversdale, which does not expect to begin mining coal until 2010, provides Tata with a foothold in Mozambique, which is opening its doors to international miners nearly two decades after a civil war ended.
"Tata Steel has vast experience in coal mining over several decades and will be contributing technical expertise to the joint venture," Muthuraman said.
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