Date: 28 January 2019 , 18:48
News ID: 3459

Hesteel buys stake in Tata's southeast Asia unit

China's state-controlled Hesteel group has taken a 70pc stake in Indian producer Tata Steel's southeast Asian steel business for $327mn.
Hesteel buys stake in Tata

Tata's southeast Asian operations has units in Singapore, Thailand, Vietnam and Malaysia with total saleable steel production of 2.23mn t in the 2017-18 fiscal year ended 31 March. Manufacturing units are located in Singapore, Thailand and Vietnam producing long steel products such as rebar and wire rod. The southeast Asia operations posted an operating profit of $13.35mn for 2017-18, down from $25.86mn in the previous year as higher scrap prices affected operations.

The acquisition expands Hesteel's overseas presence, which currently has assets worth around $10bn in non-China operations. Beijing is encouraging steel mills to export steel capacity overseas to reduce redundant capacity and emissions in China. Southeast Asia is a major importer of Chinese steel products, and the acquisition could help Hesteel to boost its manufacturing presence as the region steps up spending on infrastructure building projects.

Tata has been seeking to reduce its overseas exposure over the past few years, selling some plants in the UK and forming a joint venture with German producer ThyssenKrupp for European operations as it expands capacity at its Indian operations through expansions and acquisitions. Tata is currently expanding the capacity of its 3mn t/yr Kalinganagar plant in east India's Odisha state to 8mn t/yr, while it also acquired Bhushan Steel in a bankruptcy auction last year. Tata is currently in the running to acquire another Bhushan group company, Bhushan Power and Steel.

source: Argus Media