In a major boost to the prospects of raw material security of Tata Steel’s United Kingdom-based subsidiary Tata Steel Europe, the company has seen its reserves in its prolific Canadian iron ore mine rising by over 24%.

According to company sources, the Direct Shipping Ore (DSO) project, where the company holds about 80% stake, in the Quebec region of Canada, is approaching commercial production ?very soon? and the reserve upgrade ushers in a good sign as it assures better raw material availability for Tata Steel Europe.

According to New Millennium Corporation (NML), Tata Steel?s joint venture partner in the project, the new estimate consists of approximately 98.9 million tonne of measured and indicated mineral resources at an average grade of 59.3% Fe on a dry basis plus an additional 6.7 million tonne of inferred mineral resources at 56.7% Fe.

The announcement comes after December 2013 announcement in which the company said it is expediting the Taconite project ? a massive iron ore reserve belt in the same region and an additional ore project apart from DSO ? and looking for partners for extraction of ore and commencement of early mining.

The DSO Project is owned and operated by Tata Steel Minerals Canada Limited (TSMC), which in turn is 80% owned by Tata Steel and 20% by NML. Tata Steel owns over 26% stake in NML as well and is currently the single biggest shareholder in the company too.

According to an earlier estimate of the reserves at DSO, the project contained 64.1 million tonnes of proven and probable mineral reserves at an average grade of 58.8% Fe, and 21 million tonne of measured and indicated mineral resources at an average grade of 59.2% Fe, thereby, making a total of 85 million tonne of reserves.

?This has now increased to 98.9 million tonne,? said a company source, adding that these are the results of a drilling programme initiated in 2012.

According to the company’s annual report, while no specific date has been mentioned for the commercial production of the DSO project, TSMC has commenced production in September 2012 and achieved the production of 0.30 million tonne in 2012-13 against the proposed 0.25 million tonne. A production of 2 million tonne is planned for 2013-14.

Analysts say in current fiscal, about 2 million tonne of production is likely and, hence, they are not attaching much value to the project as times-lines are not certain. However, in a long run, the project, along with the prolific Taconite project and Howse deposit ? yet another iron ore belt near DSO, will turn out to be beneficial for the company’s European operations.

In March 2013, the company through subsidiary TSMC, entered into a framework arrangement with Labrador Iron Mines (LIM) for acquisition of a 51% stake in LIM?s Howse deposit, which is near the company?s DSO Project. This arrangement is expected to enhance resource and production and will also improve operational fexibility relating to DSO Project.

In fact, while DSO is low reserve and high grade ore, the Taconite project, where Tata Steel has a share through its holding in NML and has an 80% offtake agreement, is a massive low-grade (30%) magnetite iron ore reserve.

The company is currently looking for financial and technical partners for the project that have expertise in extracting ore from magnetite ores.

?At current estimates, the actual recoverable reserves from the Taconite project stands at at 5.6 billion tonne, but considering it has only 30% Fe content, the recoverable iron ore reserves of the project will be around 2 billion tonne,? said an analyst with a domestic brokerage, adding that even at these levels, it is still one of the biggest reserves.