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Tata Steel plans capacity expansion at units in China

Ambarish Mukherjee

New Delhi , April 12

TATA Steel will expand the capacity of its value-added products at three units located in China. These units (two long-product units and one wire drawing unit) have come under the fold of Tata Steel, following the acquisition of NatSteel Asia's steel business."Though the specifics like what the type of value addition would be taken up in which location are not finalised yet, the broad strategy is finalised," company sources said.

The company will be manufacturing semi-finished steel in India and then take it to its facilities in China for further value addition.

hese could be galvanised sheets, rebars, wire rods and wires, the sources said. Production of semi-finished steel will be undertaken in India to take advantage of the lower cost of production here, while value addition will be done in China.

The sources said the cost of production is around $50 per tonne cheaper in India as compared to China. The three units of NatSteel in China have a combined capacity of 7.96 lakh tonnes.

The long product plant located at Xiamen has a rolling capacity of four lakh tonnes annually.

The second plant located in Wugin has a rolling capacity of 3.1 lakh tonnes and the wire-drawing unit at Wuxi has an annual capacity of 86,000 tonnes.

In February, Tata Steel acquired a 100 per cent stake in NatSteel Pte Ltd, a wholly-owned special purpose vehicle created by the NatSteel group to hive off its entire steel business.

The deal was valued at 486.4 million Singapore dollars (approximately Rs 1,313 crore) subject to certain adjustments, including those for net debt, minority interest, other liabilities and working capital variance relative to 225 million Singapore dollars.

The acquisition also includes a 26 per cent equity interest owned by NatSteel in Southern Steel Berhad, a 1.3-million tonne steelmaker in Malaysia.

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