STEELMAKERS Tata Steel and Steel Authority of India Ltd (SAIL) unite to face the global competition. The two companies have agreed to join hands for coal mining in the country and considering to extend the similar coperation in sharing iron ore resources. They may even consider joint steel production at a later stage.
“Being the oldest steel making companies, Tata Steel and SAIL have high degree of cultural compatibility. The two should have started JV operations long back. But its better to be late than never,” Tata Steel managing director B Muthuraman said. SAIL and Tata Steel on Thursday signed an agreement to establish a 50:50 joint venture company for coking coal mining in India.
Mr Muthuraman said that this cooperation could be extended to joint mining of iron ore and steel making if it helps both the companies. SAIL chairman S K Roongta said that he didn’t rule out a possibility of JV in iron ore mining ands steel making. “A beginning has been made with coal. Cooperation in new areas cannot be ruled out if it proves to the advantage of both the companies,” he added.
The two companies would initially invest about Rs 12,000 crore in four coal mining projects. Later, they would scale up operations to reduce their import dependence. The JV operations in coal would only be the beginning with both companies open to expand cooperation in iron ore mining and steel making also at a later stage.
The yet to be named JV company for coal will identify, acquire and develop coal blocks in India. Four suitable medium coking coal in the state of Jharkhand with reserves of around 600 million tonne (mt) are under evaluation for this purpose by a joint working group of both the companies. The total investment in all these projects may be of the order of Rs 12,000 crore. However, the new company would initially be capitalised with only Rs 2 crore. On allotment of coal blocks, the JV will develop and carry out mining operations for captive use of SAIL and Tata Steel. The company would largely participate in bids for coal blocks required by the companies for there future requirements. However, the agreement gives freedom to both the companies to bid individually as well if a particular coal block is of interest to only one of the partnering companies.
To a question, Mr Muthuraman said that JVC would restrict itself to domestic market initially. He also ruled out any possibility of Tata Steel picking up equity in a coal SPV formed by five PSU companies for acquiring coal properties abroad