Tatas bid for Liberian mines, to put in $1.5 bn

Tata Steel is looking for raw material security at a frenetic pace and the world's sixth largest steelmaker is now eyeing the Western Cluster Iron Ore deposits in Liberia, for which a bid has already been submitted.

The Western Cluster consists of several deposits spread over 207.58 sq km and the investment is likely to be around $1.5 billion.

When asked, a Tata Steel spokesperson refused to comment and said that the company was looking at all opportunities globally in the area of resource security for the group.

Other companies have also evinced interest in these deposits and Tata Steel has responded to a bid put out by the Liberian government. Tata Steel is one of the shortlisted bidders and the only company from India.

The Western Cluster comprises the Mano River Iron Ore, The Western Position of Bomi Hills Iron Ore Deposits and the Mountain Iron Ore Deposits.

Recently, Tata Steel signed a joint venture agreement with Sodemi (a state-owned Ivory Coast mineral development company) for development of Mount Nimba Iron Ore deposits. Liberia is also on the west coast of Africa.

The Mount Nimba initiative was the first iron ore venture outside India for Tata Steel and the investment in the project by the joint venture company, where Tata Steel holds 75 per cent, could be around $1-1.5 billion in 3-4 years. The company has set a target of achieving raw material security of 50-60 per cent in the next 5-6 years.

Currently, the company's iron ore security with Corus is 20 per cent, while on a standalone basis, Tata Steel has a 100 per cent security.

Industry analysts said galloping raw material prices were propelling steel companies to run for security cover.

Iron ore prices might jump as much as 50 per cent in 2008. Contract prices for iron ore have tripled in the past five years, and back home, allocation of captive mines has become a time-consuming exercise.

The Tata group consists of Corus and Tata Steel (including Tata Steel Thailand and NatSteel Asia) and the captive iron ore resources would help in bringing down the cost of production at the Corus facilities. Corus requires 28-30 million tonnes of iron ore per annum.

Earlier this month, Tata Steel signed a joint venture agreement with Australia's Riversdale Mining to set up a special purpose vehicle to develop a hard coking coal and thermal coal project at Riversdale's key exploration tenements in Mozambique.

On the coal front, Tata Steel has a security of around 15 per cent from a standalone of 60 per cent security.

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FOR MORE ORE

Overseas buyouts are part of the company resource security efforts for the Tata group

Tata Steel is one of the shortlisted bidders and the only company from India

Tata Steel has signed a joint venture agreement with Sodemi for development of Mount Nimba Iron Ore deposits

The company's iron ore security with Corus is 20 per cent