In a move to secure raw material for its Corus facilities in UK and Europe and other global businesses, Tata Steel Ltd has entered into a Memorandum of Understanding (MoU) with Riversdale Mining Ltd, an Australian Stock Exchange listed company. Through this pact, the company will become a strategic investor in Riversdale’s Mozambique coal project by acquiring a 35 per cent stake for A$100 million (around Rs 345 crore).
The Mozambique coal project includes the coal tenements of premium hard coking coal in Benga and Tete, located in the Tete province in Mozambique, which are fully owned by Riversdale through its subsidiary.
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,” it said.
The two companies are likely to develop the project. Riversdale is presently conducting a scoping study which is likely to be completed in August 2007. The definitive agreements are expected to be finalised and executed by November 30, 2007.
The hard coking coal derived from this project will be supplied to the Corus facilities in the UK and Europe and also to the company’s enhanced requirement in India in the future.
Said B Muthuraman, managing director, Tata Steel, “The MoU with Riversdale is in the 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 the global operations.
Said Michael O’Keeffe, CEO and chairman of Riversdale, “The MoU with Tata Steel is a decisive corporate event for Riversdale and is a definitive recognition of the Moatize Coal Basin as a significant new source of supply of hard coking coal products for the global steel industry.”
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.
Riversdale Mining Ltd incorporated in 1986 is engaged in mining activities and is listed on the Australian Stock Exchange. The company owns a 74 per cent share of two anthracite projects in South Africa. In October 2006 the company acquired Africoal Mozambique Ltd through its 100 per cent subsidiary Riversdale Energy Mauritius Limited, and thereby the ownership of large coal tenements in Mozambique in the Zambezi basin. The company is currently exploring the Benga tenement.
After the takeover of Corus in the UK for over $12 billion earlier this year, this is the next big acquisition of Tata Steel — the sixth largest steel maker in the world. The Tatas are in the final stages of tying up funds for Corus. Another group company, Tata Power, had struck a deal to buy 30 per cent stake in two coal mines in Indonesia for $ 1.1 billion earlier this year. Tata Motors is also in the race to acquire Jaguar and Land Rover from Ford Motor of the US. Tata Steel shares ended 2 per cent up at Rs 652.35 in a firm Mumbai market that closed 1 per cent higher.
Source: Indian Express