Tata Steel plans to expand German auto unit

Tata Steel Europe is planning to double the capacity of its German-based automotive service centre by installing a new slitting line expected to come up by 2012.

The new slitting line will have a capacity of 140,000 tonnes per annum (tpa) and will take the total capacity of Service Center Gelsenkirchen GmbH in Germany from 225,000 tpa now to 365,000 tpa.

According to data available with Tata Steel, the centre currently has a capacity of 155,000 tpa of slitting line and 70,000 tpa of cut-to-length capacity.

Slitting lines and cut-to-length are specialised services offered by Tata Steel, especially for the automotive sector and other markets.

A slitting line is used to break down master coils into smaller coils of a particular width, that an end user such as an automotive manufacturer, tube producers and other similar sectors can use for production of precise finished goods.

It could not be ascertained as to what is Tata Steel Europe’s total slitting capacity and its plans for further capacity expansion since the company spokesperson could not be contacted.

However, Jochen Hoefges, general manager, Service Center Gelsenkirchen, in a press release issued by the company, said: “Our strategy towards the automotive sector is to increase the volume and technical innovation of the products we offer. The new slitting line will raise the service centre’s capacity as well as its product portfolio, establishing an Automotive Centre of Excellence.”

The company has earmarked an investment of €8.6 million for the expansion of Gelsenkirchen site. This site was established in 2000 to serve the German auto market with 90% of the facility’s output being supplied to the automotive industry.

Tata Steel Europe is primarily an automotive sector-focussed steel manufacturing company and manufactures a range of products for automobiles from body and closure, chassis, powertrain, suspension etc.

However, while Tata Steel Europe has adequate technology for manufacture of automotive steel, this cannot be used in India by the parent company as the weather conditions in Europe and India are different.

During a recent interaction with DNA Money, H M Nerurkar, managing director, Tata Steel said: “Due to weather conditions, Europe uses galvanized steel for the automotive sector while in India we use annealed steel. Therefore, in India we require technology largely used in Japan and neighbouring countries.”

Tata Steel recently went into a joint venture with Japanese steel major Nippon Steel to set up a 3 million tonne per annum auto-grade steel plant at its existing facility in Jamshedpur.

While on the domestic front the company is focussed to increase its auto-grade steel capacity, internationally it is keen to increase its raw material security for its European operations as Tata Steel Europe has zero backward integration on the raw material front.

On Monday, Tata Steel signed an agreement with New Millennium Capital Corp, a Canadian company, to develop two iron ore projects located in Labrador and Quebec. The total project cost will be worth Rs22,000 crore.

It would be developed by a joint venture company between Tata and New Millennium Corp of which Tata is likely to hold 80%.
The two sites together are expected to produce 22 million tonnes of iron ore annually.