BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR PRIVACY & COOKIE NOTICE
X
Skip Navigation LinksHome|News & Analysis|News Features|News Feature Detail

Print

Nerves of Steel: Views from the C-Suite



An EU-India-Australia steel triangle: GFG Alliance, Tata execs weigh in

By Paul Bartholomew, senior managing editor, and Colin Richardson, content leader


GFG Alliance plans to establish some downstream production facilities in India, where it will process semi-finished steel exported from its Whyalla steelworks in South Australia.


The London-based consortium purchased Whyalla and other steel and iron ore assets belonging to Arrium in late August with a view to expanding longs production capacity at the works to 5 million-10 million mt/year from 1.2 million mt/year.


GFG executive chairman Sanjeev Gupta said current production from Whyalla, along with combined output of roughly 1.4 million mt/year from electric arc furnaces in Sydney and Melbourne, was sufficient to meet domestic demand. The Australian business has been rebranded Liberty OneSteel.


“There’s probably another 20-30% growth [in Australia] coming in the next decade that we can serve through our existing footprint,” he told S&P Global Platts earlier this week at the World Steel Association general assembly in Brussels. “Then the new expansion will be for exports, for semis, which we’ll then finish in countries like India. They’ll go to our downstream businesses in various markets, primarily in India but to other markets as well,” he added.


Analysis continues below...


Request a free trial of: Platts Daily Briefing

Make smarter investment decisions using the latest breaking industry steel news in Platts Daily Briefing. Independent reporting by Platts’ editors and analysts covers all aspects of the steel industry, including in-depth news and analysis by region — delivered to your inbox every morning.

Request a free trial More Information


Gupta said the consortium had “quite a strong presence in India” through real estate and other assets but nothing significant in steel. “In terms of production we’re interested in a lot of things but have not yet finalized anything. For us it’ll be one of the next things,” he said, noting the preference was not to partner with existing Indian steel companies.


“Everything the business has is 100%-owned by the company; that’s the model at the moment. We’re not saying that won’t change but that’s the model today.”


Regarding the Indian steel market, Gupta said demand growth was “obviously a bit slower than one would like,” but it was “solid still with consistent growth and will keep on growing.”


He noted that India produces “less than 100 million mt today, but it’s got to be 200 million-300 million mt within a reasonable space of time, so there are lots of opportunities there.”


GFG has been an astute buyer of distressed steel assets in Australia and the UK and earlier this year joined a bid to acquire Essar Steel Minnesota. Many Indian steel companies are suffering from crippling debts, and the sector is likely to undergo some consolidation, Indian steel executives at worldsteel told Platts.


India's 2017 crude steel output may hit 100 million mt



EU – NO DUMPING GROUND FOR INDIAN STEEL: TATA


Meanwhile, the European Union will not be a dumping ground for Indian steel, Koushik Chatterjee, group executive director at Tata Steel, told Platts during a separate interview at the worldsteel conference earlier this week.


"Fair competition" is necessary and there is a "certain amount of steel on seaborne trade and it goes where the consumption is," he said. "If it's done in compliance to the regulatory framework in that geography, that's how trade happens."


Asked about blast furnace number five at Port Talbot and whether it would be relined, Chatterjee said that was an "operational decision" that would be taken by "operational management." Some sources close to the company have speculated that blast furnaces are technology of the past and the furnace would not be relined.


"Currently two furnaces are operating at Port Talbot. We are focusing on our transformation program to make the business more self-sustainable, that's the real objective we have," he said.


"Given the challenges of the industry in recent years, especially in Europe, we have worked together to affect a more sustainable business with the unions, works council and workers," he added, when asked about hostility from continental unions to the Thyssenkrupp Tata Steel joint venture.


The market in Europe was on a more sustainable footing than it had been in recent years, suggesting consumption downstream had ticked up somewhat, he said. "What we need fundamentally is the underlying macro economy of the world and Europe to be stronger and we need to see more investment in infrastructure."


Going forward he said the purchasing managers' index would be a good leading indicator of where the economy is headed and of the direction of the commodity cycle.


Read more from worldsteel:








Copyright © 2018 S&P Global Platts, a division of S&P Global. All rights reserved.