Government Should Sort Out Internal Challenges: Tata Steel

Jamshedpur: The government should sort out internal challenges at a time when the domestic steel industry is facing challenges from China, Tata Steel managing director (India and South East Asia) T V Narendran said on Saturday.

"We can do much better had the government addressed internal challenges such as availability of raw material and import duty as demand of steel would continue to grow," he told reporters here.

Mr Narendran said it was not that Indian producers are not competitive with world players as "our five/six steel producers feature in the top steel producers of the world even now".

Elaborating on the challenges faced from China, Mr Narendran said China was producing 825 million tonnes of steel against their demand of 725 million tonnes.

They are producing 100 million tonnes more than the demand, Mr Narendran said.

China was exporting two to three million tonnes, he said, adding that the total export of steel to India was 10 million tonnes, which was equivalent to the capacity of Tata Steel's Jamshedpur plant.

"We could set up a steel plant if (we) could have such a volume of export of steel," he said.

Not necessarily Tata Steel alone, this would help steel producers such as the Jindals and Sail, among others, to set up steel plant and increase the capacity of the country, which was targeting to enhance it to 300 million tonnes, he added.

To achieve the target, he said, "we will have to invest more than $200 billion to produce additional 200 million tonnes of steel".

The central government has taken various initiatives in this regard and more steps are needed to be taken to attract investment, he suggested, while focusing on the need to implement projects in sectors such as infrastructure and automobile to increase steel consumption and create job opportunities.

The steel industry is a very difficult sector due to high capital cost, transport cost, high rate of interest, but it is this industry that competes with world players, Mr Narendran said.

"We are competing with Japan and Korea, who have a zero import duty due to FTA (free trade agreement) against our more than 10 per cent," he added.

In fact, transporting our materials from Jamshedpur to Mumbai was costlier than importing it from Korea to Mumbai, he claimed while stressing on the need for infrastructure development.

Tata Steel might have to import iron-ore if the Jharkhand government did not allow the company to dispatch raw-material from its Noamundi mine in Jharkhand, Mr Narendran said.

"We are now procuring raw material from our mines in Odisha as well as purchasing from local miners, which is affecting our productivity and financial performance," he said, after unfurling the national flag inside the company works here on Saturday.

"We may have to approach the National Mineral Development Corporation (NMDC) for raw material or import it again like we did last year", he added.

Mr Narendran said the captive Noamundi mine in West Singhbhum district used to provide 50 per cent of the iron ore for the company but the state government had stopped issuing challans (forwarding notes), blocking the dispatch of the raw material to its Jamshedpur plant.

The matter was subjudice and the company will honour the court verdict when it comes, he added.

The Tata Steel MD said the financial performance of the company had been badly affected when it was forced to import iron-ore following the closure of its mines in Odisha and Jharkhand on the lease renewal issue last year.

The Noamundi mine is closed since September last on the lease renewal issue. The company had resumed production at Noamundi mine in January, after a gap of four months, he said.