Tata Steel KZN (Pty) Ltd started the construction of its rand 670 million ferrochrome plant at Richards Bay, South Africa on Monday with a ground-breaking ceremony in the Industrial Development Zone, at Alton North Area, in the port city KwaZulu-Natal.
Tata Steel is considering doubling the size of the plant, from two furnaces to four, and a decision would be made after the first year of operation. If the second phase expansion is approved, it would result in additional investment of possibly rand 400 million.
Somdev Banerjee, managing director, Tata Steel KZN (Pty), said "We may consider mixing South African and imported chrome ore for use in the two additional furnances, should the second phase of expansion be approved".
The ferro chrome plant would take about a year to complete and is scheduled to be commissioned in the fourth quarter of 2007.
It would create some 1,000 construction jobs at the peak of activity and 130 permanent jobs once the plant was fully operational.
The possible second phase expansion would add another 50 permanent jobs. Tata Steel estimates that, apart from the direct job creation, some 800 additional jobs may be created by contractors and suppliers.
The plant would produce 135,000 tonnes of high carbon ferrochrome, annually, during the first phase, from ore imported from India and Iran.
Although South Africa is the world's largest chrome producer, ore imports for the new plant will not deprive local miners of sales, nor will the ferrochrome exports compete with locally produced ferrochrome, as both the chrome ore as well as charge chrome produced in South Africa are of entirely different grades.
B Muthuraman, managing director, Tata Steel said "The ferrochrome plant would be the cleanest in the world with state-of-the-art production processes. Ferrochrome is used in the manufacture of stainless steel and the plant's output will be exported to Tata Steel existing customers, principally in Asia, Europe and the US."
He added that South Africa had been selected from an initial short list of eight countries.
The final choice was between sites in South Africa and Australia.
South Africa won because of factors, including power costs skilled technological base and manpower, developed infrastructure and logistics, and strong financial institutions.
Raman Dhawan, managing director of Tata Africa Holdings, said "Tata Group regarded South Africa as a future economic power house and a key factor in economic development in southern Africa ."
A plaque to commemorate the occasion was unveiled by the South African deputy president, Phumzile Mlambo-Ngcuka.
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