India’s Iron Fist Thumps In Canada

- November 11th, 2009

By Kishori Krishnan Exclusive To Iron Investing News
The world’s eighth-largest steel maker, India’s Tata Steel Ltd (TISC.BO), has said it expects its European unit Corus to be operating at full capacity by the end of the fiscal year in March.
Corus, Europe’s second-largest steelmaker, operated at 80 per cent capacity in October.
In a bid to ensure […]

By Kishori Krishnan Exclusive To Iron Investing News

The world’s eighth-largest steel maker, India’s Tata Steel Ltd (TISC.BO), has said it expects its European unit Corus to be operating at full capacity by the end of the fiscal year in March.

Corus, Europe’s second-largest steelmaker, operated at 80 per cent capacity in October.

In a bid to ensure adequate supply to Corus’s European plants, Tata Steel signed an C$ 300 million agreement with New Millennium Capital Corp of Canada.

The aim: to develop an iron ore mining project. The firm aims to start production from the second quarter of 2011.

New Millennium expects estimated reserves of 100 million tonnes of ore that can be shipped directly, and the firm expects an annual output of 4 million tonnes.

Tata Steel is reported to 80 per cent in the joint venture for the project. The Indian major holds the rights on the entire output from the project.

Already, Tata Steel owns a 19.9 per cent stake in New Millennium.

Vietnam project

Not just in Canada, Tata Steel is also looking at Vietnam and plans to invest US$ 5 billion to develop an iron ore mine.

The firm has formally accepted an offer from Vietnam’s Ha Tinh province to build a steel plant there.

The local authorities have offered 725 hectares of sea-facing land for a steel plant, 150 hectares for a township and 37 hectares for ancillaries.

Tata Steel’s 4.5-million-tonne project was stuck because of land dispute.

More deals

Meanwhile, the world’s biggest mining company BHP Billiton (BLT.L) is not content to sit idle, following its 50-50 iron ore deal with Rio Tinto (RIO.L).

In a numbers position, the likes of which is being much debated, the tie-up of mining giants BHP Billiton (BHP.AX) and Rio Tinto (RIO.AX)’s Western Australian iron ore assets is expected to propel the duo to the top of the global trade.

Of course, there are bids and counter bids.

What this would achieve is current number one Brazil’s Vale (VALE.N) will have to be content with a lower rung.

Vale has decided to boost investment by more than 30 per cent to around $12 billion next year in Brazil.

The company is to invest more than $5 billion by 2015 to boost production capacity in the mining state of Minas Gerais.

For some time now, critics have been keen to scupper the two giants’ proposed iron ore joint venture. Even China, the buyer of more than half all globally traded iron ore, and steelmakers spanning the globe from Japan to Europe, is amongst the list of critics.

Stakeholders maintain this would lead to monopolistic atmosphere, since Rio, BHP, and Vale control about 70 per cent of global seaborne iron ore trade.

The key ingredient in steel-making, iron ore is shipped from mines in top exporters Australia and Brazil to consumers such as China, which takes almost half the globe’s production, and Japan and South Korea.

Binging out

Incidentally, China’s appetite for iron ore rose 35.7 per cent in the first nine months of the year to 469.4 million tonnes.

Its imports however fell almost 30 per cent to 45.47 million tonnes, down from a record the previous month, but still high enough to raise further concerns about oversupply in the country’s steel sector.

Steel product exports stood at 2.71 million tonnes over October, up nearly 10 per cent compared with September.

Prices in India

Sustained demand from China has already pushed spot Indian benchmark prices up to more than $100 per tonne for the first time since mid-August.

The spot price of Indian iron ore Fe 63.5/63 per cent showed impressive gain of 3 per cent during week 46 surpassing the psychological barrier of US$ 100 per tonne CNF.

The markets sentiments seems to be inching forward to the fact that the Chinese steel market bottomed out with a gain of 1 per cent during last week.

After peaking at US$ 82 per tonne on August 7 2009, it declined by 24 per cent or US$ 20 per tonne by September 11 2009. Then it picked up steam.

Brazil story

Meanwhile, another Brazilian miner Ferrous Resources do Brasil is looking to fund an iron ore complex by raising $2.7 billion, Bloomberg reports.

The miner is planning to raise the money through a combination of debt, an initial public offering and investment from a strategic partner.

Ferrous, which is planning to borrow about $1.3 billion, is in talks about financing the Viga and Serrinha projects in Minas Gerais state, in exchange of iron ore supplies.

Company news

Labrador Iron Mines Holdings Limited (TSX: LIM) has entered into an agreement with New Millennium Capital Corp to exchange their respective mineral licences in Labrador. The Canadian firm tied up with an Indian major, Tata Steel, on Wednesday.

The exchange eliminates the fragmentation of the ownership of certain mining rights in the Schefferville area.

Labrador is developing direct shipping iron ore deposits on properties in the Labrador Trough of Canada’s main iron ore producing region in the Province of Newfoundland and Labrador near Schefferville, Quebec.

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