JOHANNESBURG: Indian steel giant Tata faces an uphill battle if it tries to take on the world's number one steel producer Arcelor Mittal in South Africa, according to a leading South African business newspaper on Wednesday.
Business Day newspaper quoted steel analyst Dirk Kotze as saying the South African market was "too small to accommodate more than one world-class steel producer." The advantageous pricing Arcelor Mittal SA enjoys on iron ore from South African company Kumba Iron Ore gave it a significant competitive advantage, he said.
The comments followed reports from India Tuesday that Tata was considering building a carbon steel plant in South Africa with a capacity of 5 million tonnes annually.
The South African government is anxious to mount competition to Arcelor Mittal SA, which has a monopoly on the local market for steel products.
Last week Arcelor Mittal SA, which is 52 per cent owned by Arcelor Mittal, was slapped with a 692-million-rand (96 million dollar) fine by the country's Competition Tribunal for "excessive pricing" in contravention of the Competition Act.
In a bid to force down Mittal's pricing the government has commissioned a feasibility study on a state-funded carbon steel plant.
A senior official in the Trade and Industry Ministry confirmed the government was in talks with Tata "and a number of other players" about the building of the plant, Business Day reported.
