Mumbai: Tata Steel has exercised its rights to acquire 80 per cent interest in the Direct Shipping Ore project of New Millennium Capital Corp, Canada (NML).
Tata Steel is the largest shareholder with 27.4 per cent in New Millennium. It has now exercised its exclusive option to participate in the DSO project and has a commitment to take the resulting production.
According to the joint venture agreement, Tata Steel will reimburse 80 per cent of NML's cost to date on the DSO project and arrange funding up to CDN $300 million (about $279 million) of capital costs for the project to earn its 80 per cent share of the venture.
Tata Steel will also get to buy 100 per cent of the DSO project's iron ore products of specified quality, at world market prices, for the life of the mining operation. It is expected that the venture will produce four million dry tonnes per year of iron ore products commencing in 2012.
Mr H.M. Nerurkar, Managing Director, Tata Steel, said, "We are hopeful that along with our partner, we would be able to move forward on various aspects of the project and commission the project in 2012, while we continue to analyse opportunities to increase the percentage of raw material security."
The DSO project contains 64.1 million tonnes of proven and probable mineral reserves at an average grade of 58.8 per cent Fe.
"Now that we have set a course for DSO production, we can look forward to working with Tata Steel on the much larger Taconite project," said Mr Robert Martin, President and CEO, NML.
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