KOLKATA (miningweekly.com) – Global steel major Tata Steel is considering merchant mining as a new business vertical that will leverage its existing expertise in captive iron-ore and coal mining.
“It is important for us to look at mining as a new business area. This is what we are evaluating just now to see how we can get into mining as business and focusing on India,” Tata Steel executive director and CFO Koushik Chatterjee said in response to queries from shareholders on Tuesday.
He said that Tata Steel would float a separate company to undertake its planned merchant mining projects across the country. However, no plans to venture overseas were officially announced.
The planned foray into commercial mining is part of the larger consolidation exercise taken up by Tata Steel to streamline its businesses under four verticals – steel production, downstream value additions, mining, infrastructure and utilities.
The global steel producer with production capacities of about 33-million tons is planning to enter commercial merchant mining at a time when the Indian government has opened up commercial coal mining for private miners and even liberalised rules for operating captive coal mines, enabling a miner to offer part of production for free merchant sale.
The entry into merchant mining was a logical step to extend its internal mining operations, considering that it was the second largest iron-ore miner after State-run NMDC with captive iron-ore assets acrossthe eastern Indian states of Odisha and Jharkhand, where its main steel producing mill was located. The steel producer also produces ferro alloys, chromite and manganese largely for consumption at its steel mills.
According to company records, Tata Steel produced 23.3-million tons of iron-ore from its captive mines during 2018/19 and 6.54-million tons of coal. The steel producer was almost fully self reliant in iron-ore from its captive mines, which provided it with raw material security and cost of production advantages, while its captive coal mines met about 27% of the requirements of its steel mill blast furnaces.
Chatterjee said that Tata Steel was currently evaluating a number of iron-ore mines in Odisha that were slated to be put up for auction as their existing lease were expiring in March 2020.