Investment Success Story
Why one of India’s largest steel producers has found a ‘second home’ in Australia
September 2013
With big plans and even bigger ambitions, Bhushan Steel says Australia will play a major role in its future. According to Anil Ahuja, one of the company’s most senior executives, Australia is a business destination that will allow Bhushan to continue to invest with confidence, and help the company realise its goal of becoming a fully integrated steel and power producer with a global reputation for excellence.
Anil Ahuja is a straight talker with a firm opinion about why his company is investing in Australia.
“I have been all over the world looking for resources for our company – China, Brazil, South Africa, the United States, Russia, Mozambique and more. Ultimately, we found Australia to be the best. The systems, the support, and the people are all extremely favourable for business.”
Ahuja has formed this view as Executive Vice-President of Bhushan Steel, one of India’s largest steel producers. Bhushan Steel has invested millions of dollars in Australia and has plans to invest up to another A$1 billion over the next 10 years.
The lure of Australia
With capacity to produce over five million tonnes of primary and secondary steel per annum, Bhushan Steel generates global annual revenue of A$2.8 billion. Most of this steel is destined for India’s automotive and white goods industries.
The company has three manufacturing units in India, factories in Nigeria and Ethiopia, servicing units in the Middle East, and sales networks across many countries, including Germany, Japan, and China. The Bhushan Group is also a power generator in India through its company Bhushan Energy.
“While the quality of the coal is a main attraction, we appreciate the attitude of the people, the reception we get from government, and the fact that laws and regulations are clear. Australia is also a safe country that accepts diversity.”
The growing demand for raw materials such as coal, oil and gas means many large industrial and energy companies are exploring investment opportunities in resources across the globe. Bhushan’s investment in Australian coal is to guarantee regular supply for its steelmaking and power plants in India.
Indian companies have made substantial investments in Australian resources in recent years. Indian executives see Australia – which allows 100 per cent foreign direct investment – as a country with little or no sovereign risk. They are attracted to Australia because of its clear policies, skilled workforce, the ease of doing business, and a timeframe for mining approvals that is shorter than other countries.
Starting small
Ahuja says Bhushan Steel invested in Australia because of its plentiful reserves and assured supply of premium quality coking coal. He says the company was also impressed by automated production techniques that would enable Bhushan Steel to generate higher output.
“We wanted coking coal to fulfil the need for our steel plant and we went everywhere this resource is available and found success in Australia,” says Ahuja. “The best coking coal is here.
Ahuja explained that Bhushan Steel, which has established offices in Brisbane and Sydney, wants to broaden its business in Australia beyond coking coal.
“The coal is something we require to manufacture steel, but we are also looking for opportunities in base metals and other resources,” he says. “Once you become a mining company, you can expand your business in other fields.
“We find it very conducive to work here, apart from some costs. Australia should be careful about the costs of doing business. It should not copy the problems you can find in other countries and make this country too costly. This is a problem all over the world, especially with big projects, but it is cyclical. We are confident that things will improve.”
“Despite these issues, the opportunities are here and this is the time to capture those opportunities.”
Bhushan Steel’s initial investment in Australia was via a 15 per cent stake in junior exploration company, Bowen Energy. Bhushan acquired the remaining 85 per cent of the Queensland-based company in February 2013, with a desire to be self-sufficient.
A ‘second home’
Ahuja says he was one of the first senior Indian steel executives to visit Australia. While in Australia, he received support from the Australian Trade Commission – Austrade.
“It was all courtesy of Austrade,” he says. “I felt so proud that people from the Australian government moved with me from place to place to introduce me to junior exploration companies and to point out where the opportunities were.
“They showed me many small courtesies that made a big difference in how we perceived Australia. I still carry these positive memories with me.”
Ahuja has travelled to Australia more than 50 times in the past six years and he is well placed to offer advice to foreign companies considering investments in Australia.
“Australia is almost my second home,” he says. “Our experience here has been so positive I would certainly advise everybody and anybody to come here.”
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