Tata Steel has identified raw material resources in America, Africa and Australia for acquisition to ensure that around 50 per cent of the requirement of Corus is met through captive sources, reports say.

Corus which is part of the Tata Steel Group, the world's sixth largest steel producer, is continuing to see unprecedented market turbulence in the steel supply chain, with increasing input cost pressures in areas of raw materials.

Last month Australian government sourcdes said Tata Steel was looking for fresh iron ore assets to feed Corus  and was scouting for an iron ore mine in Western Australia. (See: Tata Steel eyes iron ore mine in Western Australia). Australia supplies iron ore and other minerals worldwide, shipping A$53.4 billion of raw materials in 2006-07.  

As Europe's second largest steel producer with annual revenues of around £12 billion and a crude steel production of over 20 million tones, Corus does not have a single captive iron ore mine whereas Tata Steel's Indian operation, has access to captive local  iron ore and coal mines.

With an annual production capacity of 19 million tonne, Corus, mainly imports iron ore from Brazil, which is said to be hurting its performance. The company reported an EBIDTA margin of nine per cent for the year ended 31 March 2008 as against 43 per cent for Tata Steel's Indian operation.

Tata Steel had acquired five per cent stake in Carborough Downs Coal Project in Australia with an agreement to purchase 20 per cent of the project's annual production and entered into a joint venture with Riversdale Mining in Mozambique for $100 million for a 35-per cent stake.

It has also entered into a 75:25 joint venture with state-run Sodemi of Ivory Coast for exploring and developing Mt Nimba iron ore mine, which has reserves to be estimated over 500 million.

Quoting Arun Baijal, director, Tata Steel Group (global minerals) from Tata Steel's latest annual report, reports say the group had identified the Americas, Western and Southern Africa and Australia, in addition to India, as potentila regions for acquiring iron ore and coal. 

With the expansion of Jamshedpur plant and the Orissa plant going on stream the raw material security of Tata Steel would come down to 40 per cent in the next three to five years, and this would secure the company from market forces which is dominated by a few companies.

Baijal said that the company would adopt a two-pronged strategy to secure raw material resources, one, it would look for participation in the early stage of project and second, to look for opportunities which could give the Group immediate take-off.

To consolidate its raw material assets and raise funds in the next six to 12 months for new acquisitions, Tata Steel has set up an overseas holding arm (See: Tata Steel sets up overseas holding arm in Singapore; plans to raise funds for acquisitions)