Tata Steel moves to secure Canadian iron ore reserves

Toronto: India's Tata Steel Ltd will jointly develop potentially large-scale iron-ore reserves in the Canadian provinces of Labrador and Quebec with Canadian mining company, New Millennium Capital Corp. The move comes even as global steel producers move to secure raw material for manufacturing operations.

Tata Steel makes its move even as commodity prices soar and it becomes paramount for steel manufacturers to secure iron-ore reserves to guard against supply shortages.

The agreement will allow development of the LabMag and KeMag iron ore deposits to be known collectively as the Taconite Project in eastern Canada.

A statement from New Millennium said that Tata Steel will participate in an estimated C$50 million ($51.5 million) feasibility study and also enter into a joint venture agreement on successful completion of the study and opt to develop one or both deposits.

Tata Steel Global Minerals Holdings will hold an 80% stake in the joint venture, and New Millennium Capital the remainder.

New Millennium Capital's interest includes a 20% free carry equity portion and a 4% right of first refusal on future equity sales by Tata Steel to potentially increase its interest in Taconite to 40%.