With demand for steel having weakened in developed markets, Tata Steel says it will consider further restructuring at its European units if need arose.
Asked whether worsening economic situation in developed markets could see another round of restructuring by Tata Steel Europe, Tata Steel managing director HM Nerurkar, speaking exclusively to FE here, said, ?Although nothing particularly has happened in the UK, July has not been good; the market has certainly softened. If the situation demands the management will consider furthermore portfolio restructuring.?
The company has already announced employee restructuring at its Europe units because of subdued market for construction sector products and is in the 90-day consultation period with affected employees and union. The proposal targets cost savings amounting to R936 crore (?130 million, $209 million) per annum.
Another threat that looms large over Tata Steel Europe?s production facilities is that in case the company is unable to lower its carbon dioxide emission level by 2013 to meet the European Commission?s standards, it would have to lower its steel production capacity from the present 16 mtpa to 14 mtpa, which too could lead to closure of some facilities and further human resources adjustments.
Back home, Tata Steel, which would complete its 3 mtpa expansion by March 2012 to become a 10 mtpa steel producer at Jamshedpur, is also targeting to put in place a 6 mtpa plant at Kalinganagar, Orissa by 2014.
?India operations will become 16 mtpa, but Europe?s 16 mtpa can come down to 14 mtpa (in 2013) if the carbon dioxide limits are imposed, which is a serious threat,? said Nerurkar, adding the decision regarding which plants would need adjustments in order to produce 2 mtpa less steel would be taken at that point of time depending on several factors, including market.
The good news, however, is that Tata Steel, which is targeting to be at least 50% self-sufficient in raw materials by 2014, is expected to start getting iron ore supplies from its mining interests in Canada and South Africa and coal from Mozambique from the latter part of the current year. ?Efforts are on to get the supplies in the Oct-Dec (2011) quarter, but could get pushed to Q4, but it will happen (this year),? said Nerurkar.
While the steel major expects to get 1 million tonne (mt) from Schefferville Direct Shipping Ore (DSO) project in Canada and another 0.5 mt of iron ore from a South African mine in the current year (2011-12), which would rise to 4 mt and 1 mt respectively from next year (2012-13) onwards, its coal supplies from Mozambique is expected to be 0.6 mt in 2011-12 and 1 mt from next year onwards.
The steel major is also looking forward to three more iron ore resources in the coming years, including from the LabMag and KeMag taconite mines in Canada, where it is in joint venture with New Millennium Capital Corporation.
?The (LabMag and KeMag) deposits are huge and we are right now in the feasibility study; we also have already done a reasonable level of feasibility study in Ivory Coast (Mount Nimba), which (project) has received a bit of a setback because of political problems there but we are working at it,? said Nerurkar, adding that the company was also looking at some other iron ore resources in southern Africa. With respect to coal, apart from Mozambique, the steel major has a 5% stake in the under-expansion Carborough Downs mine in Australia, which gives it a 20% offtake right for the life of the mine ?which is already happening?.