In a bid to enhance raw material security for Corus, Tata Steel Ltd, India’s largest and the world’s sixth largest steel manufacturer, on Monday said that its subsidiary Tata Steel Global Mineral Holdings had signed a joint venture (JV) with Canada’s New Millennium Capital (NML) and LabMag for developing a direct shipment ore (DSO) project in Canada. The steel major plans to take up to 80% stake in the joint venture, and will fund the entire project cost of C$300 million (around Rs 1,311 crore), it said in a statement to the Bombay Stock Exchange (BSE).

The company, however, did not mention how the funds will be raised. Tata Steel holds cash and cash equivalent of Rs 6,100 crore as on September 2009. It has a total outstanding debt of Rs 24,236 crore. NML expects to produce 4 million tonne per annum of iron ore products from the DSO project.Tata Steel said it would take a decision to invest within 180 days after the feasibility study of the project, currently underway, is completed.

“On the decision to develop, Tata Steel will arrange to fund 100% of the project cost up to C$300 million for 80% equity stake in the joint venture company with NML holding a 20% stake,” Tata Steel said in a statement. Between November 2007 and Janaury 2008, Tata Steel had entered into JVs with three companies, to ensure raw material security for Corus.