Tata Steel today said it has signed an in-principle agreement with the Quebec government to develop iron ore deposits in the Canadian province, a move that can help the steelmaker reduce its raw material costs.
It relates to the provincial government's participation with TS Global Minerals Holdings', a Tata Steel group firm, in direct shipping ore project (DSO Project) in the Schefferville area.
Both parties will also work on developing the transit for iron ore, a key raw material used in making steel, from Arnaud Junction to the multi-user dock of the Port of Sept-Iles.
"Premier of Quebec Philippe Couillard, accompanied by the Minister of Economy, Innovation and Exports Jacques Daoust, announced the signing of an Agreement-in-Principle between the Government of Quebec and TS Global Minerals Holdings," Tata Steel said in regulatory filing.
Tata Steel (India & South East Asia) managing Director T V Narendra signed the agreement on behalf of the firm on the sidelines of the World Economic Forum in Davos.
"This undertaking should lead to a decision, before March 31, 2016, with respect to a government participation in the DSO Project in Schefferville area, in the North Shore region.
"Parties also agreed to cooperate in creating favorable conditions in the transit activities of iron ore from Arnaud Junction to the multi-user dock of the Port of Sept-Iles," the filing said.
Commenting on the agreement, Couillard said: "To date, Tata Steel Group has demonstrated its social responsibility by ensuring the participation of local communities in execution of its project, and in particular, participation of Aboriginal communities.
"It is in fact one of the key principles of the Plan Nord and one of the motivating factors for us to undertake discussions with a view to becoming a key partner in the development of the company's deposits."
Tata Steel, through its subsidiary Tata Steel Minerals Canada, is also completing a DSO project in Schefferville, in which the firm has invested more than 1 billion Canadian dollars (about USD 1.5 billion).
The company also plans to develop its DSO deposits in Quebec with the Government of Quebec.
DSO project involves mining, crushing, washing, screening and shipping the sinter fines and pellet fines to Tata Steel's European steel making facilities.
Tata Steel Group Finance Director Koushik Chatterjee said: "We are pleased to explore opportunities to collaborate with the government of Quebec in this challenging time for the mining industry."