Tata Steel to divert 50% of raw material to Corus in nxt 5-6yr

Tata Steel would channelise 50 percent of its iron ore and coking coal -- key inputs for making steel.

Last Updated: Aug 06, 2009, 18:14 PM IST

Jamshedpur: Tata Steel would channelise 50
percent of its iron ore and coking coal -- key inputs for
making steel-- to its European subsidiary Corus by 2015 in a
move aimed at securing raw material for the Anglo-Dutch steel
maker and cut operational cost.

The world`s sixth largest steel firm is also looking to
save one billion pounds at its European operations in 2009-10
by pursuing its cost-cutting programmes -- "Weathering the
Storm" and "Fit for Future."

"The fundamental thing is our strategy to get raw
material license to ensure that over a period of next five-six
years, Corus or Tata Steel Europe as it is now called, gets 50
per cent of the raw material," Tata Steel Managing Director B
Muthuraman told reporters here on Thursday.

The raw material for Corus would come from company`s
mines in Mozambique, Canada and South Africa besides other
places, he said, adding that the initiative would take a few
years to complete. The company would continue to scout for
more coal and iron ore assets abroad.

"So that is the journey which we have started but this
journey will take some years. These are the things which I
expect to start flowing in from 2011 onwards and slowly it
will pick up and gradually it will grow," he added.

The mines in Mozambique and Canada are likely to be
operational by 2011 while the one in South Africa is slated to
see the production start by the end of 2010.

Tata Steel had acquired Corus for USD 12 billion in 2007.
Corus needs raw material security for its business as it
depends on supply-pacts with mining giants like CVRD.

Hit by the economic crisis and the slump in steel demand
and prices, Corus had launched two cost-cutting programmes –
"Weathering the Storm" and "Fit for Future" during the last
fiscal. The programme also saw job cuts.

Muthuraman said the downturn was the best time for
companies to improve themselves and Tata Steel aimed at saving
850 million pounds on `Weathering the Storm` and another 250
million pounds on `Fit for Future` by the end of 2009-10.

"When you are in downturn you are more careful about your
costs operations...that is exactly what we are doing. We have
a programme in Tata Steel Europe `Weathering the Storm` and we
already saved in the second half of last year roughly 730
million pounds."

"This year for the whole of the year our plan is to save
850 million pounds on `Weathering the storm` which is our
strategic response to what the market demands," he said.

On `Fit for Future`, he said, "this year we will save 250
million pounds and on a sustained basis the saving is 500
million pounds on restructuring manpower position."

"This is the time to get sort of fitter. We are looking
upon this more as an opportunity. The savings over last year
we got was a billion pounds," Muthuraman added.

Bureau Report