Vale in talks with Tata Steel for plant in Brazil

Tie-up with world's biggest miner will boost Tatas' ore security

Vale, the world's largest producer of iron ore and pellets, is in talks with Tata Steel to set up a steel slab plant in Brazil.

The $20 billion mining company, formerly known as CVRD, has three plants under construction in Brazil in partnership with ThyssenKrupp, Dongkuk and Baosteel. Vale has a minority stake in these projects.

According to sources, Vale is in talks with Tata Steel as well as some of its clients for the new steel slab plant.

Replying to a query over a possible partnership with Tata Steel, a spokesperson for the Brazilian company said, "A company as large as Vale is often in talks with several companies, among them Tata Steel from India. But other than that, there is no further information about partnership or anything beyond."

A Tata Steel spokesperson said, "At this point, there is nothing."

Tata Steel has a plan to set up a 4.5 million tonnes steel complex in Vietnam in partnership with Vietnam Steel Corporation, the largest steelmaker in the south-east Asian country.

According to industry analysts, a Tata Steel-Vale alliance will be a win-win scenario for both companies.

While Vale is looking to leverage its mineral resources and cash in on the booming steel market, Tata Steel is aiming to set up steel plants close to its raw material base as well as ramp up its raw material security.

Vale's southern system mines have about 4.5 billion tonnes of iron ore reserves and the production capacity is about 170 million tonnes a year.

In the northern system, the Carajas has a production capacity of 100 million tonnes. The mineral country of Carajas has high iron ore reserves estimated at about 16 billion tonnes.

Tata aSteel, the world's sixth largest steelmaker, recently signed a joint venture agreement with Sodemi (a state-owned company for mineral development) to develop the Mount Nimba iron ore deposits in Ivory Coast, West Africa.

Tata Steel's initiatives to step up raw material security is largely on account of Corus, which requires 28-30 million tonnes of iron ore.

Tata Steel has set a target of 50-60 per cent security over the next five years, against the current 20 per cent.

Prior to the Mount Nimba deal, Tata Steel signed a joint venture agreement with Riversdale Mining for a coal project in Mozambique.