Nov 14 2005
BlueScope Steel has announced that they have approved a 50/50 Joint Venture arrangement and the development of a steel coating and building solutions business. The Board of Directors of Tata Steel had earlier approved the joint venture.
The joint venture company will build a new business across India and South Asia that will manufacture zinc/aluminium metallic coated steel, painted steel and rollformed steel products, and deliver pre-engineered buildings (PEBs) and other building solutions. The head office will be located in Pune and the joint venture agreement will be officially signed at a ceremony later this month when details about the new management will be released to the market. India is one of Asia's fastest growing economies with the world's second largest population after China.
Mr Kirby Adams, Managing Director and CEO of BlueScope Steel said: "Together, BlueScope Steel and Tata Steel have forged a powerful partnership, which will capitalise on the strengths of our two organisations in steel production and in bringing to market premium quality branded products. Both companies see the value in implementing this coated steel development strategy across South and North Asia."
Mr B Muthuraman, Managing Director, Tata Steel said "Tata Steel and BlueScope Steel share a similar approach to value creation in the steel business. Consumers would benefit from the range of solutions that will now be available to the Buildings industry. This JV combines the strengths of the two organizations and would increase the use of value added steel products."
Approvals have also been granted for the joint venture to construct a major new, state-of-the-art metallic coating and painting facility at Jamshedpur, in the state of Jharkhand, eastern India, adjacent to Tata Steel's existing steelworks. The new facility will have an annual metallic coating capacity of 250,000 tonnes and paint line capacity of 150,000 tonnes. The capital cost of the project will be approximately A$265 million or (INR 9,000million). The investment is consistent with the Company's strategy of growing its downstream value-added products business in Asia. (All figures quoted in this release are at 100% of the joint venture.)
The new facilities are expected to be operational by mid-CY2008. Various government approvals and preliminary engineering should be completed by mid CY2006 when construction activities will start.
The decision to proceed with development of a metallic coating and painting facility followed completion of a rigorous 12-month feasibility study jointly undertaken by BlueScope Steel and Tata Steel representatives and the visit of the BlueScope Steel Board of Directors to Jamshedpur in September. The study confirmed the significant market opportunity to take the leadership position in quality coated and buildings solutions within South Asia.
The joint venture company will also assume ownership and responsibility for the development of the three rollforming and PEB manufacturing facilities that BlueScope Steel has under construction at Pune, Chennai and New Delhi. The development of the three new manufacturing facilities, with a capital cost of A$100 million or (INR 3,400 million), was announced in December 2004 by BlueScope Steel. In addition, the joint venture will assume ownership of BlueScope Steel's LYSAGHT® rollforming business in Sri Lanka, which has been in operation since 1994. In both cases Tata Steel will compensate BlueScope Steel for acquiring the 50% interest.
The joint venture will offer a comprehensive range of branded steel products for building and construction applications, including the premium ZINCALUME® and COLORBOND® coated steels, LYSAGHT® rollformed steel products and BUTLER™ PEBs.
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