The Canadian province of Quebec will spend $133 million (Cdn$175 million) in an iron ore project majority owned by Tata Steel Minerals Canada (TSMC), a subsidiary of Indian giant Tata Steel.
The investment will advance development of the Direct Shipping Ore (DSO) property, which straddles the border between Quebec and Labrador, with mineral deposits on both provinces. The deal could see more than $400 million invested in the French-speaking province in the next two years, as iron ore deposits are tapped on that side of the border.
The financing includes equity stake of Cdn$125 million through Capital Mining Hydrocarbons Fund and a loan of Cdn$50 million from Investissement Quebec, acting as an agent of the government, TSMC said in a statement.
It comes at a time of improved steel demand from China, the world largest iron ore consumer, which has taken the commodity prices well above all-time lows of around $37 a tonne the commodity hit in December.
Following the Canadian government’s equity infusion in TSMC, Tata Steel’s stake is set to come down. However, the parties did not quantify how much each of them will hold after the completion of the transaction.
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