Steel giants await outcome of Tata - CSN battle for Corus

Rex Mathew
15 December 2006

The battle for Corus is being keenly watched by global steel giants to see who emerges as a potential new challenger to them.

Global steel companies are keenly watching the outcome of the bidding war between Tata Steel and CSN for Corus Group. The winner would emerge as the world's fifth-largest steel producer — and a very formidable one with control over rich iron ore reserves and presence in the fast expanding emerging markets.

No wonder, the speculation in industry circles about other large players trying to influence the outcome of the bidding war to ensure that the final denouement is more to their liking.

Indications are that some major steel manufacturers would prefer CSN gaining control over Corus rather than Tata Steel. Though CSN controls some of the richest iron ore mines in the world and is a major stakeholder in CVRD, the largest exporter of iron ore and pellets globally, it is more of a one-man show, which is already stretched financially. Chairman Benjamin Steinbruch is highly ambitious and has been facing some resistance from his consortium partners over the high financial leveraging.

The formidable Tata Group, on the other hand, backs Tata Steel. The company has hardly any debt and the group has access to enough financial resources to bankroll all its future ambitions. The group is professionally run and also has strong presence in sectors like automobiles, which are large steel consumers.

It has been speculated in global steel circles that Arcelor-Mittal, the world's largest steel maker, is backing CSN. Industry observers believe that No.1 steel maker would prefer CSN to acquire Corus rather than Tata Steel.