New Delhi: State-owned minerals trader MMTC Ltd and integrated steel company Tata Steel Ltd will form a venture to bid for overseas coal, diamond, gold and iron ore mining projects.
“While MMTC will have a 26% stake in the new company, Tata Steel will have a 74% stake. We are the world’s largest importer of diamond and gold with a yearly volume of $10 billion (Rs40,000 crore) each. This is a right and logical thing to do,” minister of state for commerce and power Jairam Ramesh said on Tuesday.
While a Tata Steel spokesperson confirmed the development, an MMTC spokesperson declined comment.
“To start with, the new company will focus on Africa and Central Asia. When I was in Angola and Namibia, we were offered diamond mines. This company will start operations from there,” the minister said.
The Indian government wanted MMTC to be party to such an arrangement as mining concessions are easier to secure in government-to-government negotiations.
India wants to leverage its strong relationships with African nations to land mining concessions, where a large quantity of minerals are found. India has discovered in recent years that China’s economic diplomacy had put its interests at a significant disadvantage.
“Looking for mines outside India is now a trend for many companies,” said Dipesh Dipu, manager at audit and consulting firm PricewaterhouseCoopers.
“In this particular case, MMTC has the expertise in trading goods while Tata Steel specializes in mining. So, the thought process could be that the Tatas would mine more than their own requirement and sell the balance amount either within the country or in other Asian countries.”
The government has taken this approach as there has been a growing demand for coal from the Indian power sector.