The year 2007 witnessed the biggest-ever mergers and acquisitions (M&A) deal of the country when Tata Steel acquired Britain?s largest steel maker Corus Group Plc for a whopping $12 billion.
The deal catapulted the country?s second largest steel producer, Tata Steel, among the top five steel producers globally, besides rendering other Indian companies the confidence to follow suit in their respective sectors.
Besides overseas acquisitions of steel companies by other domestic producers like Essar Steel and Sajjan Jindal-controlled JSW Steel, steel producers also bought equity stakes in coal blocks to ensure the supply of input materials.
Among other deals in the private sector, Tata Steel signed an agreement with Vietnam Steel Corp to set up a 4.5 mt plant in the South-East Asian nation. The company also inked a deal for coal in Mozambique in partnership with Riversdale Mining, which is listed in Australia. While, Essar bought Algoma Steel (Canada) for $1.58 billion.
Not only that Indian companies bought properties overseas, India-born Anil Agrawal-owned metal company, Vedanta Resources (UK-based), bought Sesa Goa, a private iron ore exporter with mines in Goa and Karnataka.
The government also announced a special purpose vehicle (SPV) jointly funded by public sector units?Steel Authority of India Ltd (SAIL), National Thermal Power Corp (NTPC), National Mineral Development Corp (NMDC), Coal India Ltd (CIL) and Rashtriya Ispat Nigam Ltd (RINL)?to acquire coal blocks overseas.
Domestic steel makers also came forward to announce massive expansion plans. ?As per proposals made by public and private steel makers, the sector would see an investment of Rs 2,75,00 crore by 2011-12 and Rs 8,70,000 crore by 2019-20 to achieve the targets of producing 110 mt and 200 mt respectively,? a senior steel ministry official said.
Considering the prospects of steel, the government revised the steel production target to over 110 mt by 2011-12 from the current 56 mt. State-owned SAIL also announced a decision to invest over Rs 53,000 crore to raise its production capacity to 26 mt from about the current 14 mt.
The year also witnessed the government imposing export duty on iron ore in the Budget. It, however, was revised at the insistence of the mining lobby. Initially the government levied a duty of Rs 300 on per tonne of iron ore exports. Later it reduced the duty to Rs 50 per tonne on iron ore below the 62 grade.
South Korea-based Posco and the world?s largest steel producer Arcelor Mittal, having announced huge investments to set up plants in India, could not start construction process in the two states of Orissa and Jharkhand owing to problems in land acquisition and mining leases.