At least four foreign resource firms have approached Varun Industries for a strategic stake in its Madagascar arm, after the Mumbai based firm discovered reserves of heavy minerals at its blocks in the African country.

Australia's Iluka Resources, UK's Blastrite, China's Naicher Advanced Materials and Canada's Medallion Resources are among the companies that have initiated negotiations for a possible equity stake in Varun Energy Corp Madagascar, according to two people familiar with the development.

The talks also included the option of an assured offtake agreement on heavy minerals. Varun Energy Corp is a wholly owned subsidiary of the Varun Industries and has been allocated ten blocks of heavy mineral rare earth deposits in Madagascar.

Rare earth minerals are used in most high tech products such as smart phones, medical equipment and aircraft. Varun Industries recently announced discovery of about 267 million tonnes of heavy minerals, including critical rare earth that is used by technology industry and titanium minerals, from the blocks where the company has exploratory and mining rights. While initial tests indicated ore with strengths of 29%, subsequent tests by Australia's CPG Mineral Technologies certified that ores have an average mineral content of 46.5%.

Varun's group advisor Mr Ratnakar Hegde said that "This could likely increase total reserves in deposits from earlier estimate of 267 million tones. The inquiries from foreign companies have started after these tests," he said, without naming the companies. Varun Energy has signed a memorandum of understanding with India's department of atomic energy to sell heavy minerals concentrate mined from the blocks in Madagascar. Modalities on supplies to foreign companies will be done after meeting the requirements of the department.”

(Sourced from ET)