A century ago when India was a British colony, Sir Frederick Upcott, the then chief commissioner of Great Indian Peninsular Railway, vowed to "eat every pound of steel rail" if Tatas succeeded in making the alloy.
Tata Steel's [Get Quote] $12-billion takeover of Britain's largest steel maker Corus Group Plc in early 2007 not only catapulted the Indian conglomerate to the global corporate centre-stage, but also gave other domestic companies the self-belief of taking on multinationals much bigger in size.
Not surprisingly, several compatriots such as Essar and JSW Steel [Get Quote] bought companies overseas while a few others initiated steps to acquire coal or iron ore mines abroad to ensure steady supply of raw materials for expanding output.
Back home, world's largest steel firm ArcelorMittal and South Korea's Posco struggled to start work on their three massive projects in Orissa and Jharkhand that are together estimated to cost more than $35 billion.
The year also saw heated debate within the industry and the government on the critical issue of iron ore exports. The government in its Budget imposed a tax on ore exports, but later scaled it down after much hue and cry. Meanwhile, UK-based metals firm Vedanta Resources acquired the country's top private iron ore exporter Sesa Goa [Get Quote] to diversify its portfolio that already included aluminium, copper and zinc.
Besides, the government raised the production target of country's steel making capacity to 124 million tons by 2011-12 from 56 million tons at present. In line with this goal, state firm SAIL [Get Quote] announced an investment of Rs 53,000 crore (Rs 530 billion) to hike production capacity to 26 million tons for maintaining its leadership position in the country.
The steel sector, in fact the entire Indian industry, could not have asked for a better start to 2007 with Tata Steel outbidding Brazil's CSN in January to acquire Corus Group to become the world's sixth-largest steel maker in a deal that was the biggest by an Indian company in any sector.
But Tatas were not satiated with the Corus deal only. Tata Steel inked an initial pact with Vietnam Steel Corp for building a 4.5 million tonne plant in the South-east Asian nation. It then notched a deal to extract coal from a block in Mozambique with Australia-listed Riversdale Mining.
Later, the company entered into a pact with Ivory Coast government-owned SODEMI to mine iron ore in the African nation.
Ruias-led Essar also took the west by surprise by buying Canada's Algoma Steel for 1.58 billion dollars and US-based
Minnesota steel plant for an undisclosed price. Similarly, Sajjan Jindal-led JSW Steel agreed to buy Argent Independent Steel, a service centre in the UK. It is also in talks with a local player in Mozambique to conduct due diligence on a site that could be later mined for coal.
While private companies were going the whole hog, state firms also woke up to the realities of rapidly rising prices of raw materials such as iron ore in the international market.
Steel Authority of India Ltd, Rashtriya Ispat Nigam Ltd, NTPC, Coal India and NMDC formed a joint venture to acquire properties abroad. The new entity is looking to acquire rights for coal mining in Africa, especially Mozambique.
Reports of possible dilution of stake in SAIL and RINL raised eyebrows in the industry as also in the government
during the year, but the Steel Ministry denied any such move.
Meanwhile, arch rivals India and China decided to join hands in extending cooperation in iron and steel sector and may sign a preliminary agreement for the purpose next month.
The Tata-Corus saga
|© Copyright 2007 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.|