Mon Feb 21, 2011 7:15am GMT
* Likely to invest $3.77 bln in the plant's first phase
* Initial 3 mln T capacity to be doubled later
* India currently accounts for 25 pct of total capacity (Adds details)
The plant at Kalinganagar in eastern India will have initial capacity of 3 million tonnes, which would eventually be doubled.
Tata Steel signed the initial memorandum for the plant with the local government in November 2004 and preliminary work on land acquisition and resettlement of locals is still under way, showed the company's website here p. Nerurkar said the company was likely to invest 170 billion rupees ($3.77 billion) in the plant's first phase.
Tata Steel acquired Corus, Europe's second-largest steelmaker, in 2007 for $13 billion, in the largest overseas acquisition made by an Indian company so far.
European operations account for two-thirds of Tata Steel's global capacity of about 30 million tonnes, while current Indian operations contribute a quarter.
It also has units in Thailand and Singapore.
The steel industry globally has been caught in a margin squeeze since mid-2010, when raw material costs began to steadily rise but steel prices dropped as activity slowed as recession hit developed economies.
While demand is improving from the auto sector, the other key market, construction, is struggling to pull clear of the crisis.
Tata Steel said last week its margins would remain under pressure because of increased raw materials costs as it reported quarterly net profit more than doubled, driven by demand in Europe and growth in its Indian operations. [ID:nSGE71F00F]
Nerurkar said steel prices were likely to be volatile.
He also said the company would like to retain its stake in Australia-based Riversdale Mining Ltd. ($1=45.1 Indian rupees) (Reporting by Mayank Bhardwaj and Ratnajyoti Dutta; writing by Jo Winterbottom; editing by Malini Menon, sourced:Thomson Reuters)