Tata Steel is poised to raise its direct stake from the current 80 per cent in its Canadian joint venture, Tata Steel Minerals Canada Ltd (TSMC).

Toronto-listed New Millennium Iron Corp, which holds the remaining 20 per cent in the JV, was required to make fresh investments worth Canadian $23 million ($19 million) to fund certain capital expenses for the DSO and Howse mine development projects in Canada operated by TSMC. But the company is not making any equity investment now.

Tata Steel is likely to pump in C$23 million and increase its stake in the JV. The move will result in a dilution of New Millennium’s interest in TSMC from the current 20 per cent. New Millennium and Tata Steel are currently in discussion to review the dilution process in accordance with the joint venture agreement.

Tata Steel, the largest investor in New Millennium, has decided to focus more on developing two other inferior grade (taconite) projects – Lab Mag and Key Mag – in Canada through the JV, according to sources.

The DSO and Howse projects are two different iron ore mine development ventures of TSMC in the sub-arctic zone in north-eastern Canada. The DSO project, which has begun trial shipments to Tata Steel’s European facilities, is yet to be fully commissioned. However, the capital cost for the DSO project has gone beyond the C$560 million announced in October 2012 and required further investment.

TSMC, meanwhile, has acquired the remaining 49 per cent interest in the Howse iron ore deposit for a total cash consideration of $5 million.

The initial production for the DSO project, for which Tata Steel has an entire off-take agreement with TSMC, is aimed at 1 million tonnes (mt).

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