Tata Steel could bid for a strategic stake in Mbalam iron ore mine in Cameroon by partnering Sundance Resources, the company that owns the West African mine, investment banking sources told Hindustan Times.
International media reports said Sundance Resources Chairman George Jones recently returned from a road show to promote Mbalam’s potential. Sources familiar with the development said Jones met senior Tata Steel officials last month on equity participation in the project.
Arcelor Mittal, Posco and Rio Tinto are understood to be the other potential bidders for the Mbalam project for which the potential valuation is not yet known.
A Tata Steel spokesman said reports of his company’s bid was “completely speculative and untrue.” However, company Managing Director B. Muthuraman said recently that it was looking for captive raw material security. Sundance did not respond to an e-mail seeking its comments.
According to industry analysts, Mbalam could be one of the world's biggest iron ore mines with a capacity to produce 35 million tonnes per year at least for the next 20 years. "It's not clear whether Tata is putting a bid for Mbalam. However, if so, Mbalam would assure a long-term raw material security for its operations especially outside India,” said an investment banker close to the Tata Group.
Tata Steel has a production capacity of 28 million tonnes and plans to have at least 40 per cent of raw material resources from captive units over the next five years. It had bought stake in a Canadian iron ore project and has equity participation in another iron ore mine in Ivory Coast. Corus, the Anglo-Dutch group Tata Steel has acquired, is particularly vulnerable to raw material shortage.