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Published on July 22, 2007

"We cannot live without steel," he said, adding that people in advanced economies, such as the US, in fact consume more steel than food, with a per-capita steel consumption of around 500 kilograms.

Historically, European and US giants dominated the global steel industry until the 1950s. Afterwards, Japanese steel giants rose to prominence, helping to propel Japanese auto-makers, electrical and electronic appliance makers and other industrial powerhouses to the world stage. More recently, South Korean steel makers and conglomerates appeared to have taken a path similar to that of Japan.

However, the world's largest steel-maker, Arcelor Mittal, is now controlled by London-based Indian Raksami Mittal, while Tata group, India's largest conglomerate, with annual revenues of US$50 billion (Bt1.7 trillion), earlier this year acquired the Anglo-Dutch steel maker Corus from CSN of Brazil for $11.3 billion, making it the world's sixth largest.

In Thailand, Tata will spend Bt3.5 billion on a new blast furnace facility to produce 500,000 tonnes of liquid steel for its Tata Steel (Thailand) plant in Chon Buri, which has an annual production capacity of 1.7 million tonnes for both domestic and export markets. In addition, the diversified Indian group plans to invest another Bt1.3 billion in a production plant for one-tonne pickup trucks here with an annual output of 35,000 trucks.

Tata Motors and Mahindra are also studying the possibility of buying two British brands, Jaguar and Land Rover, at an estimated cost of $1.5 billion. Both brands are currently owned by Ford Motor of the US.

Besides steel and autos, Tata also has holdings in other businesses, including those involved in chemicals, computer software, hotels, tea production and power-generation. But the steel business is currently its largest, generating $25 billion of the group's annual revenues of $50 billion. Last year, the group's steel business was also its most lucrative, bringing in profits of $1 billion.

In addition to Thailand, Tata Steel will also invest in iron-ore mining in Vietnam to supply the raw materials for its steel-production facilities.

Muthuraman, Tata Steel's chief executive, said China and India plus Thailand, Vietnam and other Southeast Asian nations had the economies of scale to lead the global steel industry, which he projected would grow at an annual rate of 3- to 4-per cent over the next two-and-a-half decades.

Growth would likely slow a little from the annual rate of 6-per cent per annum from 2000 to 2006, he said.

The large demand will continue to come from the US and Europe plus China's population of 1.4 billion and India's population of 1.3 billion, whose per-capita consumption is rising rapidly from less than 200 kg due to high GDP growth rates. On average, Asian economies are projected to grow by 6.5- to 7-per cent per annum this year, with China and India leading the pack with GDP growth rates of 10 per cent and 9 per cent, respectively.

Besides the demand from manufacturers in industries such as automobiles and appliances, steel consumption is also heavily driven by construction activities, such as those currently underway in booming China. Even in the tiny island republic of Singapore, per-capita steel consumption is as high as 1,000kg largely due to ongoing construction projects.

As for India, economic liberalisation, which started in 1992 (nearly a decade after that of China), has resulted in higher domestic steel consumption, albeit at a slower pace than that of China.

As the world's largest democracy, where public policies are mostly based on consensus rather than the ruling party's instructions, India seems to have prided itself on the motto, "slower but surer".

Nophakhun Limsamarnphun

 nop1122@yahoo.com