Quebec Govt to invest $133 m in Tata Steel’s Canadian project.

In a show of support to Tata Steel project, the Quebec Government has agreed to invest about $133 million (Canadian $175 million) in the joint venture firm Tata Steel Minerals Canada formed to execute direct shipping iron ore (DSO) project.

TSMC, a wholly-owned subsidiary of Tata Steel, owns 94 per cent in the joint venture established in October 2010 with New Millennium Iron Corp.

The financial support includes acquiring equity stake worth Canadian $125 million through Capital Mining Hydrocarbons Fund and a loan of Canadian $50 million from Investissement Quebec, acting as an agent of the government.

TSMC has forecast annual production of over 6 million tonnes of iron ore.

Koushik Chatterjee, Group Executive Director, Tata Steel, said this is a challenging time in the global iron ore industry due to soft underlying steel demand, over capacity in the steel industry and volatile foreign exchange fluctuations.

“We will continue to work closely with the Government of Quebec and other stakeholders to do all that we can do to improve the competitiveness of the Canadian iron ore business and make it more sustainable for the future,” he said.

Tata Steel Group has invested over Canadian $1 billion in the venture.

In January, Tata Steel, which was developing the DSO project to feed iron ore for its European business, scaled down operations in Canadian mines as the price of iron ore sourced from Europe was much cheaper than buying from the captive mine.

The DSO project involves mining, crushing, washing, screening and shipping the sinter fines and pellet to Tata Steel Europe which itself has been put on block recently due to sustained losses.

HBL