Sustaining Growth

Recognising the need for growth as the world recovers from the financial crisis, the Tata Steel Group has put into action initiatives that will ensure its growth is sustainable. These initiatives span the entire supply chain, from raw materials to logistics and value-added manufacturing.

2.9 mtpa Expansion Project at Jamshedpur

The Indian operations of Tata Steel are among the most cost competitive in the world, so expanding the capacity of the Jamshedpur plant in Jharkhand is naturally one of the Group’s key strategies. Tata Steel proposes to expand the Jamshedpur works’ capacity to 9.7 million tonnes per annum (mtpa) of crude steel by 2011-12. Tata Steel and Centennial Steel Company Ltd., a 100% subsidiary of Tata Steel, are jointly implementing the 2.9 mtpa expansion. This additional capacity will allow the Company to use its existing resources more efficiently, whether they be manpower, utilities or the Company’s captive mines. The project will also require less time to complete than building a greenfield steel plant.

The expansion project will involve setting up the following new facilities: a 3.05 mtpa capacity blast furnace, 2 coke oven batteries each with a capacity of 0.7 mtpa, a 6 mtpa pellet plant, a 2.4 mtpa Thin Slab Casting & Rolling (TSCR) facility, a Linz-Donawitz (LD) Basic Oxygen Converter and a lime calcining plant. The configuration and capacity of these new facilities have been chosen with a strategic rationale.

Pellet Plant: The 6 mtpa pellet plant at Jamshedpur will enable Tata Steel to use extra-fine iron ore as a blast furnace feed after beneficiation rather than scarcer forms of ore, increasing the percentage of agglomerate in the blast furnace burden to 85%.

Coke Oven Batteries:Prices for raw materials, including coke, have been rising fast and becoming increasingly volatile, so the Company has found it necessary to shield itself against these trends by augmenting its in-house coke making capacity. There is a welcome additional benefit, in that the process gas produced from the new coke batteries will be able to meet the gas requirements of the pellet plant and TSCR.

‘I’ Blast Furnace: The ‘I’ Blast Furnace, with a capacity of 3.05 mtpa, will be the largest blast furnace at Jamshedpur. The furnace will achieve a new scale of efficiency, contributing significantly to the Company’s efforts to minimise the environmental impact of the additional capacity. The furnace’s construction schedule is tight, but the Company can draw upon the expertise gained through the construction of the ‘H’ Blast Furnace, which was commissioned in 2008.

Power Supply: The increase in the Jamsehdpur plant’s power requirement caused by the expansion will be partly met by Industrial Energy Limited, a 24:76 joint venture (JV) between Tata Steel and Tata Power that ensures the expanded facilities will have a reliable, low-cost supply of power. The balance of the requirement will be met by additional purchases from the grid. Jamshedpur’s power distribution system is also being suitably upgraded.

Utilities & Other Facilities: Tata Steel has also embarked on a programme of upgrades to the existing facilities at Jamshedpur in order to increase the efficiency. This programme will entail work on the LD facility, the raw materials handling systems and the utility & water management systems at both Jamshedpur and the iron ore mines.

Pollution Control: Some of the older production units at Jamshedpur will be retrofitted with high-efficiency dust extraction units, while others, such as the No. 3 Coke Oven Battery and Blast Furnaces ‘A’, ‘B’, ‘D’ & ‘E’, will either be phased out or retired.

Riversdale Mining Limited – Coal Project

On 14th April 2010, a formal groundbreaking ceremony was held at the Benga Coal Project in the presence of the President of the Republic of Mozambique, His Excellency Armando Emílio Guebuza. The ceremony followed a series of milestones already achieved by the Company. Tata Steel has enhanced its holding in Riversdale Mining Limited (RML) to 21.2% and has a 35% equity holding with 40% offtake rights in Riversdale Mozambique.

New Millennium Capital Corporation (NML) – Iron Ore Project

On 25th February 2010, New Millennium Capital Corporation (NML) approved the outcome of a feasibility study to develop its 100%-owned Direct Shipping Ore properties. The project has proven and probable mineral reserves of 64.1 million tonnes and a production of 4 mtpa of sinter fines is expected to commence from Q3 2011. In May 2010 Tata Steel entered into a letter of intent to subscribe to 14.285 million shares in the company at C$ 1.40/share for an aggregate price of C$ 20 million. If the offering is completed, Tata Steel’s stake would increase to 27.4% from its current holding of 19.65%.

Dhamra Port Company Limited

Dhamra Port Company Limited, a 50:50 JV between Tata Steel Limited and Larsen & Toubro, is developing a deep-draught port under a concession agreement on a Build, Own, Operate, Share and Transfer basis. The port will provide Tata Steel with cost benefits by integrating its raw materials logistics. It will start commercial operations by August 2010.