The group is also keen on investing in hydro-power sector in the Republic. Tata Steel [Get Quote], the world's sixth largest steel-maker, is looking at acquiring iron ore deposits in Laos, officially the Lao People's Democratic Republic.
The Tata group-owned steel company has already started prospecting some mines in Communist-ruled Laos.
Speaking to Business Standard, Soulivong Daravong, minister of planning and investment, Lao PDR, said that though there was no formal proposal from the Indian company as yet, "they were prospecting some iron ore deposits quietly". A Tata Steel spokesperson refused to comment.
Daravong was part of a delegation that accompanied the southeast Asian country's President Choummaly Sayasone on a five-day visit to India that concluded on Saturday.
The minister also said that the Tata group was keen on investing in the hydro power sector in the country. Laos is welcoming private investment in the mining and hydro power sectors.
Even though 100-per cent foreign direct investment was allowed in most sectors, a foreign company would have to form a joint venture with the government for projects related to natural resources.
Lao and Behold
- Lao PDR is a Southeast Asian country
- Tata Steel is looking at acquiring iron ore deposits in the country
- Sizeable deposits of ore are known to exist in Laos
- The move to step up raw material security is due to soaring prices
- In the last 12 months, annual iron ore contract prices have increased 70 per cent
B Muthuraman, managing director, Tata Steel, met Sayasone in Kolkata on Friday.
Sizeable deposits of iron ore are known to exist in Laos, which is bordered by Myanmar and China to the northwest, Vietnam to the east, Cambodia to the south, and Thailand to the west. If the acquisition materialises, then it would be the third foreign iron ore deposit in Tata Steel's portfolio.
Last year, Tata Steel entered into a joint venture with Sodemi, a government-owned mineral development company in Africa, for development of Mount Nimba iron ore deposits in Ivory Coast. The iron ore from the project would be supplied to the Corus facilities in the UK and the Netherlands.
Tata Steel also has a greenfield steel project in Vietnam, which includes a 30-per cent stake in Thach Khe Iron Ore joint stock company. The joint stock company would undertake mining in the Thach Khe iron ore mine.
The move to step up raw material security was due to soaring prices. In the last 12 months, annual iron ore contract prices have increased 70 per cent, while spot prices have increased 117 per cent.
While Tata Steel meets all of its iron ore requirements from its own mines for Indian operations, for the group, which includes Corus and other foreign acquisitions, it stands at 22 per cent. The company has set a target of 40 per cent raw material security over the next three-five years.
To achieve its target, Tata Steel has chalked out a two-pronged strategy of participation in the early stage of a project, i.e. in exploration/pre-feasibility stage or to look for opportunities which could give the group immediate off-take.
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