Tata Steel Europe to spend R3,300 cr a year to upgrade plant, machinery

Tata Steel Europe has decided to invest around ?400 million (R3,300 crore) a year for the next few years on updating plant and machinery at different locations in Europe.

?We are talking of a run rate of roughly ?400 million per annum to catch up against depreciation, which is of the order of around ?310-320 million a year; so we are catching up a bit of what was left behind for as long as we can do that?, said Tata Steel Europe CEO and managing director Karl-Ulrich Kohler.

Kohler, who was here to attend the Founder?s Day celebrations on Sunday, said for the company?s current 16.4 million tonne per annum steel (mtpa) making capacity in Europe, the replacement and upgradation investment could not be below ?400 million a year.

Tata Steel Europe had last month (February) put into operation rebuilt blast furnace No. 4 at Port Talbot, which would now produce up to 5 million tonne per annum (mtpa) of saleable steel, which would be a significant addition to its earlier capacity.

While an investment of around ?185 million (R1,526 crore) went into rebuilding the blast furnace (No. 4), an additional investment of ?50 million (R412 crore) was made in the adjacent steel melting shop to make it more energy-saving.

The company?s only other blast furnace No. 5 in Port Talbot had undergone successful ?mid-campaign repairs? last year.

After getting refurbished its No. 4 and No. 5 blast furnaces in Port Talbot, work would now be taken up to repair the No 7 blast furnace (of 3.5 mtpa capacity) at Ijmuiden, Kohler said.

?There?s a problem; we need to fix it, it?s a three-week repair which would happen soon,? he added.

While its blast furnaces 4 and 5 are located at Port Talbot in Wales in the UK, and 6 & 7 in Ijmuiden in the Netherlands, its four other blast furnaces named after British queens Victoria, Anne, Bess and Mary are located in the northern UK, of which only the first two were currently operational.

Thus, with six operational blast furnaces and another 1 million tonne per annum specialty steel producing electric arc furnace located in Rotherham, Tata Steel Europe?s total steel producing capacity today stands at around 16.4 million tonne per annum.

Tata Steel Europe?s deliveries in the first three quarters of the current year have been 3.21 mt (Q1), 3.42 mt (Q2) and 3.02 (Q3) respectively, adding up to 9.65 mt so far.

Low demand on the continent and elsewhere has forced Tata Steel Europe to keep its operations at around 80% capacity utilisation level for the last three years, including in the current year.

Asked whether working at 80% capacity utilisation was good enough for Tata Steel Europe in the current situation, the Tata Steel Europe CEO & managing director said, ?No, we must work at higher levels and we must find solutions to the lack of demand in Europe. We can export to countries that are coastal; we want to get much closer to it (16.4 mtpa capacity) in the next fiscal year (2013-14), if the market allows?.