Tata Steel eyes steel plant in S Africa; secures $1 billion SBI loan for Corus funding

Mumbai: Tata Steel Ltd, the world''s sixth-largest steelmaker, is planning to build a steel plant in South Africa, reports quoting a senior official of the company said.

"Talks are on," for securing coal and iron ore, the report quoted the unidentified official as saying. "It could be around 5 million tonnes if they give us coal and iron ore mines," the official added.

Tata Steel, which bought Anglo-Dutch Corus for $12.9 billion this year, said it is setting up a $100m ferrochrome plant in South Africa.

The company will also buy a 35-per cent stake in a Mozambique coal project run by Australia''s Riversdale Mining Ltd, for $86 million to provide coking coal for its plants in Europe and India, the report said.

Tata Steel currently imports 1.3 million tonnes or 30 per cent of its annual coal requirement. This is expected to rise to two million tonnes in the future, the official said. "Our aim is to be about 50 per cent self-sufficient."

Meanwhile, Tata Steel has secured a $1 billion loan from the State Bank of India (SBI) for completing the fund-raising for its $12.9 billion acquisition of Anglo-Dutch steelmaker Corus.

SBI has agreed to provide up to $1 billion to Tata Steel''s special purpose vehicle, Tata Steel UK, to refinance $7.2 billion of bridge loans taken for the biggest buyout by an Indian company.

"We have approved a loan of $800 million to $1 billion to Tata Steel," said a senior SBI official. A Tata Steel spokesperson confirmed that the company was availing of the loan from the SBI.

Tata Steel had to turn to the SBI after some foreign banks backed out thanks to the sub-prime crisis in the US and the credit squeeze that followed.

This is also the first acquisition financing of this size provided by the SBI, which till now was involved in deals of less than $100 million (Rs 410 crore).

Early last month, Tata Steel had to agree to pay 50 basis points more on a $1-billion, seven-year loan as the banks participating in the loan syndication bargained for higher yield. The loan''s underwriters were ABN Amro, Citigroup and Standard Chartered.