The Canadian government is investing C$125 million (Rs 680 crore) in Tata Steel iron ore project in the Quebec region and is also supporting a loan of C$50 million (Rs 272 crore) from one of its financing arms. The equity-cum-loan assistance is aimed at stoking growth in the mining sector in the region and also for creating jobs.
Tata Steel Minerals Canada is the Tata Steel arm that is developing the iron ore project in Quebec and holds a 94% stake. The remaining 6% is held by the Toronto-listed New Millennium Corporation.
In turn, Tata Steel is again the largest shareholder of New Millennium Corporation. Following the Canadian government’s equity infusion in Tata Steel Minerals Canada, Tata Steel’s stake is set to come down. However, the parties involved in the deal did not quantify how much each of them will hold after the completion of the transaction.
Tata Steel has invested over C$1billion (Rs 5,435 crore) in the project, which includes processing facilities, rail and port infrastructure, among others. Estimated annual production from the project is over six million tonnes of iron ore. Tata Steel Minerals Canada ships the mining products to its steel making facilities in the UK and Europe, where Tata Steel is restructuring operations that has been battered by cheap Chinese products, expensive energy costs and losses.
The Canadian government’s financial assistance for the Quebec iron ore project follows a similar financial package proposal by the UK government for Tata Steel’s Port Talbot operations to rescue the British steel industry and to protect jobs.