New Delhi, April 20: State-owned trading company MMTC Limited has entered into a joint venture with Tata Steel for mining operations in Africa.

Tata Steel will have a 74 per cent stake in the joint venture, while the trading firm will hold the rest.

Sources said the Tatas would be involved in mining, and MMTC in trading.

The proposal for the public-private partnership was an outcome of the recent visit of Union minister of state for commerce and power Jairam Ramesh to some African countries.

“The governments of Angola and Namibia have offered a diamond mine each to India for exploration and development. Considering that we are the largest importers of gold and diamond, this provides us with an excellent opportunity,” the minister said.

India imports $10 billion each of gold and diamond every year.

It faces competition from China for Africa’s oil, precious metals and minerals. While China’s involvement with Africa has led to allegations of exploitation of mineral resources, India plans to help in the continent’s development.

In the recently concluded India-Africa summit, Prime Minister Manmohan Singh had said India wanted to partner Africa in its development.

Officials said the joint venture would provide a strong foothold to Indian firms for expansion in Africa.

The sources said the venture could also look at coal and iron ore mining rights in other overseas markets.

The Tatas are expanding in the power sector. The group has won the 4,000MW Mundra mega power project and is scouting for mines globally to ensure a steady supply to its plants.

Tata Steel recently acquired stakes in two Indonesian coal mines to meet its energy demands.

In August last year, the company had acquired a 35 per cent stake in a Mozambique coal project for $85 million.

The MMTC board, which has approved the formation of the joint venture, is understood to have cleared the proposal for setting up of a special purpose vehicle (SPV).

After the proposal is cleared by the Tata Steel board, it would be placed before the government for final approval.

The officials said the government was in favour of such public-private partnerships as it was easy to secure mining concessions if a government agency was involved in the negotiations.

The venture will start with a modest capital base. The exact capital structure of the SPV is being worked out. While the African markets will be the focus of the venture, it will also explore opportunities in Australia, Brazil, Russia and Indonesia, the sources said.

Tata Power can piggyback on MMTC’s coal mine stakes in Indonesia and Australia for its power and steel projects, the sources added.

Profit rises

MMTC has reported a standalone net profit of Rs 90.62 crore for the quarter ended March 31 compared with Rs 38.90 crore for the corresponding quarter last year.

The standalone total income increased to Rs 9,421.60 crore for the quarter under review from Rs 4,889.57 crore in the year-ago period.

For the year ended March 31, 2007, the company posted a net profit of Rs 206.15 crore against Rs 126.80 crore in the previous year.

The total income for the year increased to Rs 26,313.57 crore for the year from Rs 23,347.31 crore in the previous year.

MMTC, India’s largest international trading company, is also setting up a silver and gold medallion and jewellery manufacturing unit in Haryana. The unit is likely to be operational by the end of 2009.