23 August 2006
Indian steel giant Tata Steel has started construction on a R650-million high-carbon ferrochrome plant in Richards Bay on the KwaZulu-Natal coast.
The investment confirms Tata Group’s belief in South Africa following investments in a number of industries in the country, notably the automotive and telecommunications sectors.
In its first phase the new plant, due to be operational by October 2007, will produce 135 000 tons of high-carbon ferrochrome a year from ore imported from India and Iran.
The ferrochrome, which is used in the manufacture of stainless steel, will be exported to Tata Steel customers in Asia, Europe and the United States.
Possible R400m second phase
The company said in a statement that a decision on a R400-million second phase expansion of the plant, involving doubling its size from two furnaces to four, would be made after the first year of operation.
Speaking at a ceremony to mark the start of construction in Richards Bay on Monday, Tata Steel MD B Muthuraman said the final choice of location had been between sites in South Africa and Australia.
South Africa won, Muthuraman said, because of such factors as the country’s power costs, skilled technological base and manpower, developed infrastructure and logistics arrangements, and strong financial institutions.
Tata Africa Holdings MD Raman Dhawan said the Tata Group regarded South Africa as a future economic powerhouse and a key factor in economic development in the southern African region.
‘Vote of confidence in SA’
South African Deputy President Phumzile Mlambo-Ngcuka told guests at the ceremony that Tata’s involvement in South Africa was “a vote of confidence in our democracy.”
“The ferrochrome plant is off course very significant as it is located in [the Richards Bay] Industrial Development Zone, and will assist to attract further investments.”
South Africa was beginning to reap the rewards of foreign direct investment after working for years on building a stable political and economic climate, Mlambo-Ngcuka said.
She described India as a key partner for South Africa, adding that both countries were members of the India-Brazil-South Africa trilateral agreement.
“Our political and economic relations are sound and are based on mutual respect and concern for each other’s development,” she said, adding that India was among the top 10 countries currently investing in South Africa.
Local content, skills transfer
Although South Africa is the world’s largest chrome producer, ore imports for Tata’s new plant will not deprive local miners of sales, nor will the ferrochrome exports compete with locally produced ferrochrome, as the chrome ore and charge chrome produced in South Africa are of different grades.
Somdeb Banerjee, MD of Tata Steel KZN, said that if the second phase expansion were approved, Tata Steel would consider mixing South African and imported chrome ore for use in the two additional furnaces.
According to Tata Steel, the new plant will create about 1 000 jobs at the peak of construction, 130 permanent jobs once the plant is operational, and indirectly some 800 additional jobs through contractors and suppliers.
A feature of the Richards Bay plant, the company said, was the establishment of a locally owned operation to manufacture the chromite briquettes that will be used in the smelter.
Local workers will be trained in briquette making by trained personnel from India, and will then produce briquettes for the smelter on a contract basis.