Tata Steel forms JV for iron ore mining in Canada

The joint venture company (JVC) 'Tata Steel Minerals Canada Ltd' would acquire all of the Direct Shipping Ore (DSO) project's mining claims and assets among others. Tata Steel's subsidiary Tata Steel Global Minerals Holdings Pte Ltd would have 80 per cent stake in the JVC while the remaining 20 per cent would be owned by NML.

In a statement, Tata Steel said the JVC would also "carry out detailed engineering and construction of facilities and will be responsible for the operations of the DSO Project." The JVC is expected to produce 4 million tonnes per year of iron ore products commencing in 2012, which would be shipped to Tata Steel's European arm.

Also, Tata Steel said it has also appointed four directors to the JVC board while one director is from NML. The steel maker's Partha Sengupta (Vice President, Raw Materials), Rajesh Sharma (Executive In Charge, Southern Africa), Dinesh Shastri (General Manager, Global Mineral Resources) and Sandip Biswas (Group Head Corporate Finance and Treasury) would be on the JVC board.

NML's Secretary Roy Hudson would also be on the board. According to today's statement, NML would be reimbursed for 80 per cent of the "DSO project costs incurred to closing."

Last month, the company had said it would acquire 80 per cent stake in DSO, for about Rs 1,350 crore. The project which contains 64.1 million tonnes of proven and probable mineral reserves was owned by NML in which Tata Steel had 27.4 per cent stake.

More than a year ago, Tata Steel had entered into an binding agreement with New Millennium, whereby the steel maker had the option to acquire 80 per cent equity interest in the DSO project located in the provinces of Newfoundland and Labrador and Quebec.