Tata Steel’s Canadian arm Tata Steel Minerals Canada (TSMC) has signed definitive agreements with Resources Quebec and Investment Quebec, the investing arms of the provincial government for investment of 125 million Canadian dollars (Rs 624 crore) in equity and 50 million Canadian dollars (approximately Rs 250 crore) in debt, giving 18% stake in the Canadian arm to Resources Quebec.
The Tata Group Company will start mining operations across Quebec, Newfoundland, and Labrador Peninsula and set up multiple processing facilities, including a beneficiation plant, said a Tata Steel statement. TSMC is a joint venture between Tata Steel and Canada’s New Millennium Iron Corp, with Tata Steel owning 94 per cent stake.
Post this transaction, Tata Steel and New Millennium Iron Corp stakes will be reduced to 77.68% and 4.32%, respectively.
Commenting on the deal, Tata Steel Group Executive Director (Finance and Corporate) Koushik Chatterjee said, “This investment signals the Government of Quebec’s co-operation in supporting sustainable development in line with the objectives of its Plan Nord Initiative. We are confident that the Quebec government’s investment will facilitate implementation of Tata Steel Mineral Canada’s future plans of ramping up production, improving cost competitiveness and the development of the mineral deposits in Quebec.”
In a separate development, while addressing the fund managers from brokerages and institutional investors, Mr. Chatterjee also ward of investors fear that the company will downsize, exit businesses and dismissed former chairman Cyrus Mistry’s claim that only a part of the potential $10 billion impairment charge has been taken yet.
“Tata Steel continues to pursue its European consolidation strategy and a talk with Thyssenkrupp AG for a potential joint venture is ongoing and progressing.” Chatterjee told the fund managers and institutional investors.
“They assured that there will be no change in their strategy with respect to their UK assets sale and JV after change of leadership at Tata Sons but Mr. Chatterjee also said that there can be no guarantee that these talks will result in signing of definitive agreements,” said an analyst who attended the meet at Bombay House on Friday on the condition of anonymity.
Analysts from HSBC, Deutsche Equities, JP Morgan, Credit Suisse, Morgan Stanley attended the meet at Bombay House that lasted for over an hour. Fund managers from Birla Sunlife Asset Management HDFC Asset Management, and Reliance Capital Asset Management and Life Insurance Corporation (LIC), Tata Steel’s single largest shareholder after Tata Sons also attended the meet.
Tata Steel shares closed up 1.85% on BSE at Rs 404.45 in a flat Mumbai market on Friday.
