Tata Steel is exercising its option to acquire an 80% stake in its iron ore joint venture with Canada's New Millennium Capital (NML) to secure the ore required for making steel for its European operations at Corus Steel.
The steel major yesterday agreed to exercise its option to acquire an 80% interest in its JV with Calgary, Alberta-based NML's Schefferville Direct Shipping Ore (DSO) Project by paying NML C$300 million (Rs1,350 crore) of capital costs for the project to take 100% of the iron ore from the project at world market prices, for the life of the mining operation.
As part of the joint venture agreement, the steel maker will also reimburse NML 80% of the cost incurred to date on the project, a press statement said.
The DSO project has the capacity to produce 4 million dry tonnes per year of iron ore starting in 2012 and Tata Steel, the world's seventh-largest steel maker will ship the ore to its European arm Corus, which has plants in the Netherlands and the UK.
H.M. Nerurkar, Managing Director of Tata Steel, said "We are pleased to take the investment decision to develop the DSO Project. The project's location, infrastructure and ore quality ensure reliable and consistent source of supply for Tata Steel. We are hopeful that along with our partner, we would be able to move forward on various aspects of the project including training activities, and commence construction with a view to commissioning the Project in 2012."
NML, a publicly-owned company listed on the TSX Venture Exchange, controls the emerging Millennium Iron Range, located in the province of Newfoundland and Labrador and in the Province of Quebec, which holds one of the world's largest undeveloped magnetic iron ore deposits.
The Canadian miner owns 80% of the mine that is estimated to have reserves of around 100 million tonnes. The DSO project includes several deposits in Quebec and Labrador near Schefferville.