Mumbai: Tata Steel, which is looking for fresh iron ore assets to feed its UK acquisition Corus Steel, is scouting for an iron ore mine in Western Australia, sources from the government of Western Australia said in Mumbai.

Tata Steel emerged the world's sixth largest steel producer with 28.1 million of annual production capacity after the acquisition of  Anglo-Dutch steel maker Corus.

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

Tata Steel, which is also looking for iron ore mines in South Africa, shrugged off rumours, saying it was but logical for a company to look for iron ore mines in Western Australia since this region has huge reserves.

Western Australia supplies iron ore and other minerals worldwide, shipping A$53.4 billion of raw materials in 2006-07.  Petroleum contributed to A$ 16.4 billion while iron ore exports contributed A$15.8 billion to the kitty.

Reports, meanwhile, said Tata Steel is planning to set up a company overseas for consolidating its raw material assets and raise funds in the next six to 12 months for acquisitions.

Tata Steel's Indian operation, with access to captive iron ore and coal mines, is one of the least cost worldwide but the UK operation of Corus Steel does not have a single captive iron ore mine.

Corus, with an annual production capacity of 19 million tonne, mainly imports iron ore from Brazil. This is hurting its performance. The company reported an EBIDTA margin of nine per cent for the year ended 31 March 2008 as against 43 per cent for Tata Steel's Indian operation.

With the contract prices of iron ore almost doubling, the problem has compounded for Tata Steel.

Tata Steel had acquired five 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 for $100 million for 35 per cent stake.

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