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Tata to build ferrochrome plant in SA
By agencies
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Monday, 27 February 2006, 20:30 IST
CAPE TOWN: Tata Steel Ltd plans to build a 120,000 ton ferrochrome smelter in South Africa to be up and running by the end of 2007, taking advantage of projected growth in the sector.
Priyadarshan Roy, the head of ferro alloys and minerals at Tata, said the steel group would build a low-cost smelter for the alloy at Richards Bay, to spread its wings from its Indian base.
Tata's current ferrochrome production including other partners in India is about 180,000 tons per year, about 50 percent of which is used locally and the rest exported.
"We are in an expansive mode, that's why we are putting up the 120,000 tons smelter in South Africa's Richards Bay... we are bullish," he said at an international chromium conference in Cape Town.
"We think demand from stainless steel producers will go higher over the next 15 years or so, barring the temporary drops in prices such as we experienced last year."
Tata's Richards Bay project is in an environmental clearance stage, and hearings have already taken place. A decision on the environmental suitability was expected soon. Roy declined to say how much the project would cost.
Once complete, the plant would boost Tata's total ferrochrome output to 300,000 tons per year, Roy said.
Like other producers planning to invest in ferrochrome plants in South Africa, Roy was confident the sector's weak prices would rise sooner rather than later.
"I see at least a 5 cent (per lb) price increase coming up in the spot and contract price in the second quarter," he said. "With stainless steel sector balanced returning, and with projected growth in demand from the sector, I think there will be enough market for everybody," he said.
South Africa is the world's biggest producer of ferrochrome, whose prices nearly doubled in 2004 on supply difficulties, but have come under pressure as the market grapples with a surplus and production cutbacks by stainless steel producers. They use ferrochrome as an anti-corrosive element in steel.
First quarter contract prices dipped by 5 cents to around 63 US cents per lb.