Date:02/10/2008 URL: http://www.thehindu.com/2008/10/02/stories/2008100256381800.htm

Business

Tata Steel to acquire 20% in Canadian company

Special Correspondent

Signs binding agreement with New Millennium Capital

MUMBAI: Tata Steel’s wholly owned indirect subsidiary, Tata Steel Global Minerals Holdings Pte Limited, Singapore, has entered into a binding agreement with New Millennium Capital Corporation, Canada (NML) whereby Tata Steel will become a strategic investor in NML. Tata Steel will acquire 19.9 per cent of the common shares of the expanded capital base of NML for a consideration of $22.6 million (Rs. 106 crore). According to a company statement, Tata Steel has the option to acquire 80 per cent equity in NML’s Direct Shipping Ore (DSO) project in the province of Newfoundland and Labrador and the province of Quebec.

NML will use the proceeds of the private placement to primarily develop the DSO project through a definitive feasibility study to be completed in the second quarter of 2009.

The agreement says that upon completion of the placement, Tata Steel is entitled to two nominees on the board of NML and to a right of first refusal in future placement of equity securities conducted by NML and a pre-emptive right in connection with other offerings of equity securities.

New joint venture

Tata Steel will have exclusivity on the DSO project till the completion of the feasibility study and based on historical estimates, the DSO project contains in excess of 100 million tonnes of direct shipping quality ore.

After the completion of the feasibility study, Tata Steel will have an option for a 180 day period to acquire 80 per cent equity interest in the joint venture to be set up to develop and operate the DSO project and will have a 100 per cent off-take right on the DSO project’s iron ore production for the life of the mining operation.

Subject to a positive feasibility study, regulatory approvals and project financing, NML expects to produce 4 million tonnes per annum of iron ore products from the DSO project commencing 2010. B Muthuraman, Managing Director, Tata Steel, said, “subject to the establishment of their economic viability, these projects may prove to be a source for part of the raw material requirements of 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.”