By Sohrab Darabshaw
A new alliance on the steel and mining fronts seems to be crystallizing between India and Brazil. Both countries have decided to increase cooperation and encourage investment opportunities in the steel and mining sectors, following a high-level ministerial visit from India to Brazil. India's Steel Minister Beni Prasad Verma headed the team to Brazil last week, which ended up signing a letter of intent for strengthening bilateral ties in the two sectors.
The letter aims to encourage investment opportunities in the iron- and steel-related sectors by companies from both nations, and facilitate the exchange of technical know-how for the growth of the steel industry -- including pelletization plants, a statement from the Indian steel ministry said. "Both the governments would jointly work for developing the steel industry and to exchange technically qualified manpower for sustainable growth of the iron and steel industry," the ministry said in a statement.
Brazil is the world's No. 3 iron ore producer, and boasts Vale (VALE), the world's largest ore company. Iron ore is something that is in short supply these days in India because of a judicial ban on mining it in some of the leading Indian states. The Indian delegation also reportedly made inquiries about iron ore and manganese deposits for the Indian state-run firms, such as NMDC Ltd. The visit, say Indian government officials, also explored the possibility of signing a memorandum of understanding when the Brazil's president comes to visit India in the next few months.
The Indian side took the view that the recent drop in iron ore prices was the right time to go in for an overseas mineral acquisition, and the choices could be either an ore mining company or one in the coking coal business. Significantly, former Brazilian President Luiz Inácio Lula da Silva was in New Delhi to receive the Indira Gandhi Award for Peace, Disarmament and Development 2010. One of the reasons for this award was the two-term president's consistent advocacy for strong ties among the developing countries and for his singular contribution to the India-Brazil partnership's cause.
The Confederation of Indian Industry, too, has opined that such high-profile visits will encourage better ties between both nations. Trade between India and Brazil, part of the BRIC group of the world's emerging economies, is growing at 35% per year.