Tata Steel arm signs five-year contract with Brazilian firm

Submitted by Narendra Jakhad on Fri, 10/17/2008 - 10:04

World's sixth largest steel maker Tata Steel has notified that its UK subsidiary Corus Ltd has signed a contract with Brazilian firm Companhia Vale do Rio Doce (Vale).

The Corus agreement is one of the largest long-term contracts yet signed between an iron-ore supplier and a steelmaker.

Under the deal, Vale will supply Corus’ plants in Europe with almost 63 million tonnes of iron ore over five years and the contract will come into effect in 2009.

However market experts quoted that, Corus could see improvement in its margins this year, because the company itself doesn’t have any iron ore mine and depends on external suppliers for it.

Many players including Steel giant ArcelorMittal revised the long-term iron ore contract prices upwards by 65 per cent in the beginning of the year. But at this point of time, when the iron ore prices have come down significantly in last few months, it is expected that Corus will be definitely get benefited from the deal. The cost for Corus will be lower.

The scrip of Tata Steel has ended the day at Rs 270, down 1% compared to its previous close. The total traded volume of shares was 2,406,714 on BSE.


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