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Tata Steel buys stake in Riversdale

MUMBAI: Tata Steel on Friday signed an accord with an Australian firm to buy 35 per cent stake in its Mozambique coal project for 100 million Australian dollars (about Rs. 345 crore).

The Mozambique coal project includes the coal tenements of premium hard coking coal (fully owned by Riversdale through its subsidiary) in Benga and Tete, located in the Tete province in Mozambique. The Benga and Tete tenements together cover an area of 24,960 hectares.

The Riversdale management expects that the potential mineralisation of the area will be substantially high. The MoU contemplates the relationship between Riversdale and Tata Steel to develop the project. Riversdale is now conducting a scoping study which is likely to be completed in August, while definitive agreements are expected to be finalised and executed by November 30.

The hard coking coal derived from this project will be supplied to the Corus facilities in the U.K. and Europe and to the company’s enhanced requirement in India in the future.

According to B. Muthuraman, Managing Director, Tata Steel, “the memorandum of understanding with Riversdale is in line with Tata Steel’s stated strategy of progressing towards raw material security for its global business. This partnership gives Tata Steel an opportunity to jointly explore part of a large coal basin which could prove to be a potential source to meet part of the raw material requirement and enhance the long term competitiveness of global operations.” According to a company statement, the completion of the transactions contemplated by the MoU is subject to completion of due diligence, definitive agreements, and board approval of both companies and regulatory approvals.

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