INDINOX 2010

Ferrochrome &Stainless Steel : Brightening India’s future

Prabhash GokarnHead (M&BD), FAMD, Tata Steel Ltd

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In discussion with Mr. Veerbhadra Singh , Steel Minister

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This presentation is an amalgamation of author’s own views.

Tata Steel does not necessarily subscribe to the views expressed in the presentation and the views should not be taken as company policy.

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Ferro Alloys & Minerals Division

Strong Brand Equity

USD 62.5 billion

6.3% of India GDP

61% of Group Revenue

Employees 350,000 people worldwide

The TATA GROUP

THE TATA GROUP

Founded by Jamsetji Nusserwanji Tata in 1869, a visionary, nationalist and philanthropist who believed that wealth must be shared

HISTORY OF FIRSTS : First integrated steel plant

First hotel chain

First hydro electric power plant

First institute of technical education

First to discover & nurture Chrome & Manganese

The Tata Group

MOTORS

CHEMICALS

TEA

STEEL

TELECOM

FERRO ALLOYS & MINERALS

US$25 Bn.

US$3450M

ENERGY

SERVICES

Group Profile

SOFTWARE

US$400M

TATA STEEL

Tata Steel is the flagship company of the Tata Group

First to discover and nurture India’s mineral wealth : first Manganese and chrome mines, first Ferro alloy plant. Amongst the largest Ferro alloy producers in India – amongst World’s top 6 Chrome producers.

MINERALS

Other Divisions:

FAMDLong

Products &Wires

Agrico & Hand Tools

FERRO ALLOYS

Tubes

CHROME ALLOYS MANGANESE ALLOYS DOLOMITE / PYROXINITECHROME CONCENTATE

FLUXES

FERRO ALLOYS & MINERALS DIVISION

Flat Products

Bearings

FeCr and ChCr FeMn and SiMn

EngineeringAutomation

FACILITIES

CHROM E CUSTOMERS

MANGANESE CUSTOMERSFLUX CUSTOMERS

GLOBAL REACH

Some Major Customers……

Excellence Recognises Excellence

Facilities & PlantsMines Location Product ProductionChromite Mines Sukinda, Orissa Chrome Ore 1 Million MTPAManganese Mines Joda, Orissa Manganese Ore 0.33 Million MTPADolomite Mines Gomardih, Orissa Dolomite 0.5 Million MTPA

Ferro Alloy Plants Facility Current Product Production

FAP Bamnipal, Orissa33.5 MVA closed furnace

Ferro Chrome 55,000 MTPA

FAP Joda, Orissa9MVA & 15MVA semi-closed fce

Manganese Alloys 50,000 MTPA

FAP, Cuttack Orissa 2 * 16.5 MVA fce Ferro Chrome 50,000 MTPATSKZN, Richards Bay, South Africa

2 * 38 MVA fce Charge Chrome 150,000 MTPA

Additional production of ferro alloys through Long Term Conversion Arrangements of ~2 lakh MTPA

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Chrome Alloy Scenario In India

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Chrome Discovery• Nicolas-Louis Vauquelin in 1797 • Chromium-iron spinel now known as chromite (FeOCr2O3). • Colorful salts : name derived from “khrôma” Greek word for colour. • In 1798-99, Lowitz & Klaproth independently discovered chromium from the Beresof Mines South-Eastern France.

Stainless Steel• Corrosion resistance of iron-chromium alloys first recognized in 1821 by

the French metallurgist Pierre Berthier• 1890s – 1915 : various patents for different iron – chromium stainless

alloys . Harry Brearley usually credited with first patent for Martensitic stainless steel in 1915, & Dr Hatfield with invention of 18/8 type Austenitic Stainless Steel.

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Source : ICDA, USGS

94%

95% of total chrome used in metallurgical applications - prime

demand driverMetallurgic

al94%

Refractory1%

Foundry Sands

3%

Chemical2%

Chromite - Uses

Industrial uses & Intermediate Products - Chromite

Refractory Chemical Metallurgical Foundry SandsCement kiln Chrome Plating Ferrous Alloys

Fiberglass furnace Corrosion control -Cast IronGlass tank regenerator Metal finishing -Steel :

Mag-chrome refractories Pigments alloyOthers Tanning Chemicals stainless

(Chromates, Non ferrous alloysDi-chromates) Aluminium

Others CopperNickelOthers

70% of chrome used in metallurgical applications

- is for making stainless steel

18% is for making alloy steel

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Global Chrome Reserves

India in The Global Chrome Market (1)

Global Chrome Alloy Production CY09

India has a total chrome ore reserve of 213 million MT (proved 31mill MT, probable 35 mill MT, recoverable 66 mill MT).98% in state of Orissa

India has a total chrome alloy production capacity of 876 MVA,Prodn in 2009 : 6,05,000 MT 70% in state of OrissaChinese LAM Coke preferredPower cost & availability concerns

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India in The Global Chrome Market (2)

Cr Ore/Conc 2005 2006 2007 2008 20090

5

10

15

20

25

30

35

40

45

1013

106 5

0

22

2222

33

25

0

Export to China Export ROW Used inside India

60%80%

1 2 3 4 50

10

20

30

40

50

60

70

80

90

69 18 19

38

35 34

44

30

26

FeCr Export to China FeCr Export to ROW Used inside India

50%

32%

60%< 10%

Chrome Ore/Concentrate Ferro Chrome

India has moved from mainly a supplier of Chrome Ore/Concentrate to a global supplier of Ferro Chrome. Today, most chrome ores are used within India.

Domestic consumption of ferro chrome has remained more or less stagnant, due to slow growth of the SS & Alloy steel industry. Share of FeCr used within the country has dropped to one-third.

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India in The Global Chrome Market (3)Production capacity 2.5 mil MT.

Product mix- 75% Flat :25% Long. 76% output in 200 series. 10% in 400 series fast growing

Majority from Private enterprises which mainly produce Flat products. 5% production from Govt enterprises who are mostly in Long products

In 2009 SS production expected 1.8 to 2.4 mill MT (figures from different sources!!).

SS Exports 0.5 million MT, mainly Bright Bars, Utensils.

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China in The Global Chrome Market (1)

Chrome OreInsignificant Chrome Ore Reserves compared to IndiaChrome ore production < 3 lakh MT, mainly used for refractory & chemical applications.

Imports Chrome Ore from mainly S Africa, Oman. Imports from India have reduced sharply.

Ferro ChromeTurned a net importer of HC Ferro Chrome from 2002.

Significant imports from India. Quantum jump in HC FeCr imports in last 2 years.

Significant producer of Silico Chrome & LC FeCr

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2,686

4,505

6,2906,940

6,000

3,0244,325

6,0916,449

4,979

854 1,043 1,296

1,506

750233 440

1,348

1,094

1,660

0

2000

4000

6000

8000

2005 2006 2007 2008 2009 Till SeptQu

anti

ty('

000

MT

)

SS production Import of Chrome Ore & ConcProduction of Ferro Chrome Import of Ferro Chrome

China in The Global Chrome Market (2)

Total production capacity 13 million MT; one-third of global capacity

Flats : 7 million MT - State Owned Joint enterprises

Longs : 6 million MT – mostly private enterprises

2009: SS production expected 8 mill MT, capacity utilisation of 62%.

Significant exports. China now the world’s largest SS Player.

SS Prodn In China grew at a CAGR of @22% (2005-2009)

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China in The Global Chrome Market (2) – India FactorChina’s dependence on India in Chrome Ore or Chrome

AlloysIndia’s spend share as supplier of Chrome Ore & Conc to China 2005 : 32%, 2007 : 16%, 2009 : 7%

India’s spend share as supplier of Ferro Chrome to China- 2005 : 28%, 2007 : 14%, 2009 : 17%

Share of India’s Ferro Chrome export to China as part of India’s total production increased to a level of 60%

China prefers Indian Ferro Chrome :- High grade - Short Sailing Time- No Seasonal Effect- Time zone advantage

Domestic FerroChrome Demand

Demand in India for ferro chrome has not grown significantly as yet : growing from 1.7 mill MTPA to 2.5 mill MTPA (2000-2009)

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Other issues in India

1. Secure suppliers / customers : LT Contracts with fixed monthly committed lifting quantity

2. Price : need to evolve an acceptable BM. Monthly/quarterly BM based pricing on LT Contracts.

3. Improvement in Logistics : specially inland transport in Orissa and from the Eastern to the western part of India.

4. Power availability and need to keep power costs low

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¿ Quo Vadis ?

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800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

2009 2010 2011 2012 2013

1,450

1,3501,450

1,5001,600

1,041

1,156

1,4061,476

1,576'0

00 M

T

China India

Ferro Chrome : India catching up with China

China turned a net importer of HC Ferro Chrome from India since 2002, with a quantum jump in HC FeCr imports in last 2 years. Significant increase in FeCr production within India forecast, India will catch up with China by 2013.

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8,4009,100

9,76010,690 11,070

0

3,000

6,000

9,000

12,000

2010 2011 2012 2013 2014

'00

0 M

T

Year Flat Long Total

2005 1001 153 1154

2010 1685 373 2058

2015 3185 900 4085

Source ISSDA

Projected Stainless Steel Growth

Stainless Steel : • China SS growth to slow to 6-8% CAGR between 2010 - 2015• Significant opportunity for India to emulate growth of China during

2005- 2009 (@22). • However, most optimistic projections for Stainless Steel by ISSDA

@12% CAGR

China India

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less Till 2000 2001 to 2004 2005 to current The possible future

Stainless Steel

Ferro Chrome

Chrome Ore

China reaching half million MT production

Emergence of China as player of significance

in global Stainless Steel

Dominance of China in global Stainless Steel

production

Increased Dominance of China, Emergence of India : high growth in Stainless

Steel production

No Ferro Chrome import by China

China starts importing Ferro Chrome : 1st time

import rom India

Increased production of Ferro Chrome in China and

India. Quantum jump in India’s share in China’s import

China secures Chrome Ore supplies through equity

stakes in Zimbabwe, South Africa etc. Further

consolidation : Cr Ore -FeCr - Stainless Steel

India’s production reaches 2 million MT

India’s production reached 3 million MT with one third

exported to China

Restriction of Ore supply from India . China shifted to supply from other countries

Higher production consumption & export of

Ferro Chrome in India.

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• Rapid increase in Ferro chrome demand in China and India will boost Ferro Chrome production in India in a big way.

• An opportunity exists for India to grow like China did in the global Stainless Steel arena, and emerge as a big global producer, consumer and exporter of stainless steel.

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THANK YOU

for more information :

please visit us at – www.tatasteel.com/famd

email - prabhash.gokarn@gmail.com

Visitors At Our Stall

Mr. S K Rungta, Chairman SAIL

Mr. Veerbhadra Singh , Steel Minister Delegates from S S World news, Netherlands

Mr. Sujal Shah, Director Commercial, Shah Alloys

Visitors At Our Stall

(Right) Mr. Rajesh Agar, GM procurement, Electrotherm

Mr. Sanjay Purohit, Our Ahmedabad depot representative

Mr. NeelKamal Vakil, AIA Engineering

Our Hostess explaining to the visitors