Tata Steel and ThyssenKrupp's widely anticipated move to work toward tying up their European steel businesses may lead to changes in met coal and iron ore procurement and supplier strategies, with a shake-up in volumes from another potential giant group set to rival ArcelorMittal.
A combined group, set to be headquartered in Amsterdam, along with ArcelorMittal of Luxembourg, would increasingly dominate Atlantic demand to two buyers, from three, in certain steel raw material segments such as iron ore pellets and pellet feed, high-grade fines, and in met coal for US and Australian premium grades.
The 50:50 joint venture would have steel shipments of around 21 million mt/year, and may yield annual synergies, the companies said Wednesday, highlighting joint optimization of procurement and logistics as part of the benefits expected.
In broad terms, 21 million mt/year of steel group sales may account for demand of around 30 million-32 million mt/year of iron ore and around 12 million-18 million mt/year of coking coal and PCI demand, based on comments from executives and S&P Global Platts calculations using industry estimates.
In iron ore, the combined group would consist of a pellet plant in IJmuiden, along with sinter plants, with a large take up in pellets, and lump especially for TKS furnaces in Germany.
Tata Steel and TKS are large users of LKAB blast furnace iron ore pellets, and use pellet feed and concentrates to sweeten iron ore fines in sintering.
Vale and other Brazilian suppliers along with ArcelorMittal and Rio Tinto's IOC of Canada also supply material to the region. Anglo American supplies lump via South Africa and iron ore concentrates from Minas Rio in Brazil, while other suppliers in the two countries supply additional lump volumes.
INDIA
Tata's Indian steel operation, which has its own local iron ore mines, imports some iron ore from seaborne suppliers, partly for quality or in the past due to supply curbs.
Tata's acquisition of a pellet plant in India previously developed by Stemcor gave the wider group an interesting outlook.
More European mills have been offered pellets from India, with different chemistry given high alumina levels. Tata's experience in India may provide an advantage in best using such material in future with the usual blend of Swedish, Canadian, Brazilian and Ukrainian and Russian iron ore pellets on offer and in usage.
In met coal, Tata is a big US met coal buyer, from the East Coast as well as Alabama, while TKS is focused on Alabama products and other suppliers, especially those from Australia.
TKS, since its divestment of the CSA mill in southern Brazil, is no longer so active in procuring from the US East Coast, where it previously relied on a blend of low-vol and high-vol and crossover material for new stamp charging ovens for the Itaguai mill.
Stamp charging may allow for higher CSR coke production from lower CSR rated coals, and can benefit from cost advantages usually as higher CSR coals are more coveted by some buyers, and trade at bigger premiums, depending also on ash and sulfur levels among other metallurgical properties.
In Europe, with coke ovens in Germany at Duisburg and those at IJmuiden and Port Talbot, operating constraints depending on each set-up may limit some usage of US East Coast low-vols due to wall exertion pressure in traditional top loading slot coke ovens.
Tata is a regular buyer of US high-vol of various grades and some mid-vols from the East Coast. Meanwhile, both companies, along with ArcelorMittal, buy sizable proportions of premium coals and some low ash mid-vol and second tier HCC from Australia. Tata also buys increasing volumes for Indian operations.
Personnel shifts at Tata occurred this summer, with Jan Jaspers taking on the role of general manager for raw materials procurement, reporting to divisional director Ranjan Sinha.
Robert Galle, previously general manager, has moved to take charge of strategy and risk management related to the European and Indian unit's steel raw materials procurement.
Tata's IJmuiden team historically purchased met coal and all seaborne iron ore for both Tata Steel Europe and for Indian parent entity Tata Steel Ltd.
Tata also has an office in Singapore involved in met coal procurement.
At TKS, managing director Leo Gronwald leads the group from Duisburg related to all steel raw materials procurement and logistics.
TKS has just let go of raw materials purchasing responsibility for CSA to its new owner Ternium group of Argentina, and is now focused on buying for TKS's wholly owned operations and those of the HKM joint venture, which it holds with Salzgitter Group and Saarstahl.
