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Tata Steel is scouting for chrome ore resources in South Africa to ensure raw material supply to its ferrochrome plant in that country.
“We have shortlisted some mines and expect to announce the details and investments in about two months,” said Mr H.M.Nerurkar, CEO, Tata Steel, told reporters on Monday night.
The company has a ferrochrome plant — Tata Steel KZN Pte Ltd located at Richards Bay on the KwaZulu Natal coast of South Africa. It produces high carbon ferrochrome or charge chrome, an alloy of chromium and iron, used in making stainless steel.
The Tata Steel CEO sees a strong demand for the steel sector despite the rising interest rates.
“Though commodity inflation is a bit of concern, there is no dip in construction and infrastructure spending. There is some concern on the slowdown in automotive and consumer goods segments, but it is not alarming. Overall I don’t see the hike in interest rates as a big problem. The demand for steel would continue at around 11 per cent this year,” he said.
As part of its greenfield expansion, Tata Steel is looking at Karnataka to set up an in integrated steel plant in the northern part of the state. “We are in early stage discussions with the State Government and the size, location and investments for the proposed plants are yet to be finalised,” Mr Nerurkar said.
The company expects its upcoming Orissa steel plant to be operational in the last quarter of 2013-14. Mr Nerurkar said land acquisition for the 3 mtpa plant in Chattisgarh will begin soon. The company would look at setting up a second plant in Jharkhand after completing the ongoing modernisation at its Jamshedpur plant, where the capacity is being increased to 10 mtpa by March 12.
The Tata Steel Group CFO, Mr Koushik Chatterjee, said the company expects to fund its expansion through internal accruals.
Though the company had tied up debt of $2.5 billion for its expansion projects, Mr Chatterjee said: “We do see drawing on debt and expect to fund from internal accruals.’’
The company is seeing high cash generation and recently realised over $1 billion from the sale of its stake in Riversdale.
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