Tata Steel begins construction of R670 million Ferrochrome plant in South Africa
Richards Bay, August 21, 2006

Tata Steel KZN (Pty) today celebrated the start of construction of its R670 million Ferrochrome plant at Richards Bay with a groundbreaking ceremony in the Industrial Development Zone, at Alton North Area, in the largest port city in KwaZulu-Natal.

A plaque to commemorate the occasion was unveiled by the South African Deputy President, Phumzile Mlambo-Ngcuka. Among the dignitaries present were Minister Essop Pahad, Minister in the Presidency, Dr Ndebele, Premier of Kwa Zulu Natal, Prof Ndabandaba, MEC Agriculture and Environmental Affairs of Kwa Zulu Natal, Dr Z Mkhize, MEC Finance and Economic Affairs of KwaZulu-Natal, Denny Moffat, mayor of Richards Bay, B Muthuraman, managing director of Tata Steel, India, Raman Dhawan, managing director of Tata Africa Holdings and Somdeb Banerjee, managing director of Tata Steel KZN (Pty).

Tata Steel is rated as the most efficient global steel producer and is the largest fully-integrated chrome manufacturer in India, where its operations extend from chrome mining to beneficiation and the manufacture of ferrochrome for local and international markets.

Mr Muthuraman told guests at the ceremony that the high-carbon ferrochrome plant would be "the cleanest in the world" with state-of-the-art production processes. Ferrochrome is used in the manufacture of stainless steel and the plant's output will be exported to Tata Steel existing customers, principally in Asia, Europe and the United States.

Tata Steel is considering doubling the size of the plant, from two furnaces to four, and a decision will be made after the first year of operation. If the phase II expansion is approved, it will result in additional investment of possibly R400 million.

The plant will take about a year to complete and is scheduled to be commissioned in the fourth quarter of 2007. It will create some 1000 construction jobs at the peak of construction and 130 permanent jobs once the plant is fully operational. The possible phase II expansion would add another 50 permanent jobs. Tata Steel estimates that, apart from the direct job creation, some 800 additional jobs may be created by contractors and suppliers.

Mr Muthuraman said South Africa had been selected from an initial short list of eight countries. The final choice was between sites in South Africa and Australia, with South Africa winning because of factors including power costs, skilled technological base and manpower, developed infrastructure / logistics arrangements, and its strong financial institutions.

Richards Bays Industrial Development Zone (IDZ) emerged as the most attractive destination as it satisfied all criteria and was an economically advantageous site for producing ferrochrome on a sustainable basis.

The plant will produce 135000 tons of high-carbon ferrochrome, annually, during phase 1, from ore imported from India and Iran.

Although South Africa is the world's largest chrome producer, ore imports for the new plant will not deprive local miners of sales, nor will the ferrochrome exports compete with locally produced ferrochrome, as both the chrome ore as well as charge chrome produced in South Africa are of entirely different grades.

Mr Raman Dhawan, managing director of Tata Africa Holdings, said the Tata Group regarded South Africa as a future economic powerhouse and a key factor in economic development in Southern Africa.

The investment in the Ferrochrome plant showed Tata's confidence in South Africa following its investments in various industries in the country, most notably the motor vehicle and telecommunications.

Mr Somdeb Banerjee, managing director of Tata Steel KZN, thanked all the visiting and local dignitaries, as well as the municipality and public for their support throughout this journey.

Mr Banerjee said that if the phase II expansion was approved, Tata Steel might consider mixing South African and imported chrome ore for use in the two additional furnaces.

A feature of the Richards Bay plant is the establishment of a locally owned operation to manufacture the chromite briquettes that will be used in the smelter. The local workers will be trained in briquette making by trained personnel from India, and the group will then produce briquettes for the smelter on a local contract basis.

Tata Steel is currently developing plans to provide training and skills transfer to local employees.