Move to buy reserves in Western Australia is aimed at supplying iron ore to Corus' plants.

Scouting for iron ore reserves to feed Anglo-Dutch steel maker Corus, Tata Steel is looking at acquiring an iron ore mine in Western Australia.

"Tata Steel has expressed interest to invest in Western Australia's iron ore sector," said Eric Ripper, deputy premier, treasurer, minister of state Development, government of Western Australia.

When contacted, a Tata Steel exectuive said it was only logical for the company to look for iron ore mines in Western Australia since the region had huge reserves.

The sixth largest steel producer in the world with 28.1 million tonnes of annual capacity, Tata Steel is also looking for iron ore mines in South Africa and Australia, among other geographies, the company had earlier said.

The company also has plans to set up a company overseas for consolidating its raw material assets and raise funds in the next 6 to 12 months for acquisitions.

Western Australia is a global supplier of minerals and petroleum products, with exports worth A$53.4 billion in 2006-07. Iron ore was the second highest contributor to that kitty at A$15.8 billion, preceded by petroleum at A$16.4 billion.

The Indian operation of Tata Steel is one of the lowest-cost producers of steel, having access to captive iron ore and coal mines. But it does not export iron ore to Corus, which does not have a single captive iron ore mine.

Corus, which has 19 million tonnes annual capacity, mainly imports iron ore from Brazil to feed its production. This impacts badly on its performance as is visible from the company's EBIDTA margin, a pointer to the health of a firm, which was 9 per cent for the year ended March 2008 as against Tata Steel's Indian operation at 43 per cent.

The Indian operation helped the over 100-year-old company to post a relatively good show on EBIDTA margin for the year ended March 2008. However, it came down to 14.05 per cent for the year ended March 2008 as against 31.1 per cent in the previous financial year.

The problem has compounded as the iron ore price has gone up by seven-fold in the international market since 2000.

There is no sign of the price cooling down in the coming days as the world's second largest steel maker, Nippon Steel, and three other Japanese steel companies recently agreed to buy iron ore this year from BHP Billiton at close double the contract price over the previous year's price.

Tata Steel had acquired a 5 per cent stake in Carborough Downs Coal Project in Australia with an agreement to purchase 20 per cent of the project's annual production and entered into a joint venture with Riversdale Mining in Mozambique doling out $100 million for a 35 per cent stake.

It has also entered into a 75:25 joint venture agreement with Ivory Coast Government-owned Sodemi for exploring and developing Mt Nimba iron ore mine, which has an estimated over 500 million tonnes of reserves.