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Analysts
World Steel Dynamics had predicted that demand in India
would grow at 8 per cent, faster than anywhere else in the
world, albeit on a small base of 30 million tonnes per annum
(mtpa). The government is keen to increase steel production
three-fold to 100 mtpa by 2020, assuming GDP grows 7-8 per
cent.
But the global majors’ interest in India goes beyond the
market. Steel companies realise that they need to get raw
material linkages (many of the plants Mittal bought are
integrated with mines). ‘‘Tying up raw material linkages is
the most pressing need for steel companies,’’ said a senior
executive with Tata Steel.
The realisation has been enforced by the spurt in raw
material prices—iron ore prices have climbed 19 per cent
this year after soaring a record 71.5 per cent last year.
Coking coal prices, which doubled in 2004, continue to
remain firm. Prices have shot up due to a spurt in steel
output and transport bottlenecks at ports.
Mining majors, who failed to anticipate demand, have
announced new projects that will add 215 million tonnes of
ore by 2009. But prices are likely to stay firm, as
producers try to recover their costs. Access to raw material
is key, which is why Mittal is coming to India or Tatas are
going to Iran (which has gas plus ore).
Steel companies see little sense in carting bulky raw
material to plants halfway across the world, and that’s
where India fits in. At 13,460 million tonnes, India has the
fourth largest reserves of iron ore (7.4 per cent of global
reserves). Most of it is present along the country’s east—in
Orissa, Jharkhand and Chhattisgarh—which are close to the
larger Asian markets.
But India has to compete with other countries for ore. China
has coal but is poor in iron ore; Australia has both;
Ukraine and Brazil have abundant iron ore. If it’s a choice
between coal and iron ore, it’s better to have the latter,
say experts.
INDIA:
A MELTING POT? Rs40,000 cr The cost of the 12 m tonne plant
proposed by Mittal in Orissa Rs55,000 cr The investment
Posco is planning to make for its 12 mtpa plant in Orissa
Rs41,000 cr Mittal Steel expects to spend on its proposed 10
m tonne plant in Jharkhand 35,000cr Rs Investments planned
by Indian steel companies in Orissa. |
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