Tata steel arm to buy 19.9 per cent in Canadian firm

Mumbai: Tata Steel Global Minerals Holdings, Singapore, a wholly owned indirect subsidiary of Tata Steel, will acquire 19.9 per cent in New Millennium Capital Corporation, Canada (NML), for $22 million (Rs 106 crore).

NML is a publicly owned Canadian mining company engaged in exploration and development of iron ore properties. It controls 9.1 billion tonnes of NI 43-101 taconite mineral resources – 6.9 billion tonnes measured and indicated and 2.2 billion tonnes inferred.

Tata Steel will acquire the stake of the common shares of the expanded capital base of NML and also have the option to acquire 80 per cent equity in NML’s Direct Shipping Ore project (DSO Project) in the Province of Newfoundland and Labrador (NL) and the Province of Quebec.

Mr B. Muthuraman, Managing Director, Tata Steel Ltd, said: “This binding agreement with New Millennium gives the Tata Steel Group an opportunity to work closely with New Millennium on the DSO and LabMag properties to develop these as a world-class project. The projects may prove to be a source for part of the raw materials requirement of the Tata Steel Group. In view of its geographical proximity, Canada is a favourable location to source raw materials for Tata Steel Group’s European operations.”

A Tata Steel release said the agreement provided exclusivity to Tata Steel to the DSO Project and the LabMag taconite iron ore property, which NML owns 80 per cent and the Naskapi Nation of Kawawachikamach 20 per cent..

NML will use the private placement proceeds primarily to develop the DSO Project through a definitive feasibility study scheduled for completion in the second quarter of 2009. The DSO Project is estimated to have over 100 million tonnes of direct shipping quality ore.

Tata Steel will also have a 100 per cent offtake rights in the DSO Project. NML expects to produce four million tonnes per annum beginning 2010. It will also have exclusivity to negotiate and settle a transaction of LabMag project till June 30, 2009.

The LabMag deposit has 3.5 billion tonnes of proven and probable mineral reserves. The reserves are in 4.6 billion tonnes of measured and indicated resources and 1.2 billion tonnes of inferred resources.