TATA Steel has commenced the feasibility study on two Canadian iron ore mines, with estimated 5.6 billion tonne reserves, for the possibility of buying a stake in them in order to feed its European operations.

Tata Steel’s Chief, Corporate Affairs and Communications, Mr Charudatta Despande said that “A feasibility study has been commissioned by the Board with regards to the LabMag and Kemag projects with results likely to come in by the end of this year or early 2013. It is on the basis of this study we would decide the course ahead.”

The steel major has joined hands with Canadian firm New Millennium Capital Corporation for conducting the study, a very preliminary step to assess the potential of the mines. TATA Steel is the largest stakeholder in NML with around 27% stake.

TATA Steel said that the two projects, LabMag and Kemag, are located near the Direct Shipping Ore project in Labrador, Canada. It is estimated that 5.6 billion tonnes of proven and probable iron ore reserves are available.

NML had announced a pact with Tata Steel Global Minerals Holdings Pte to develop the LabMag and Kemag iron ore deposits, known collectively as the Taconite Project.

The two also agreed to enter into a binding joint venture agreement upon the successful completion of the feasibility study and TATA Steel electing to develop one or both of the deposits. As per the agreement, Tata Steel and NML would hold 80 per cent and 20% stake, respectively, in the proposed joint venture.

Iron ore from these mines are expected to feed European operation of Tata Steel. Volatility in raw material prices had in the last fiscal year impacted the bottom-line of Tata Steel Europe, which has around 18 million tonne capacity.

Source - PTI

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