Tata Steel forges deal with Riversdale Mining

World’s fifth largest steelmaker Tata Steel today signed an agreement with Riversdale...

World’s fifth largest steelmaker Tata Steel today signed an agreement with Riversdale Mining to form a special purpose joint venture vehicle to develop a hard coking and thermal coal project in Mozambique. The two companies had earlier signed a memorandum of understanding to this effect in August and the JV signals the end of the process of due diligence.

Tata will pay $88.2 million to acquire 35 per cent project interest. With this, Tata has secured a key position in the JV formed to develop the Mozambique Coal Project, as well as a 40 per cent share of the off-take for coking coal, all of which will go into Corus’s plants in UK and Europe. Tata will also have the option to participate above this level of tonnage, and may participate with Riversdale in future opportunities on surrounding tenements.

“In August we had signed an MoU but it was not a definitive agreement like today’s. The project is undergoing a feasibility study and we will know the exact timing, production of the facility as well as infrastructural requirements in six months time,” Tata Steel CFO Kaushik Chatterjee said. “This will enhance raw material security for all our projects and the coal from here is intended for Corus’ steel plants.”

The JV comprises two licences (the Benga and Tete licences) and covers an area of 24,960 hectares (approximately 96.7 square miles). Riversdale Mining holds a total acreage of over 290,000 hectares (1, 120 square miles) in Mozambique. The total resource is estimated at 1.225 billion tonnes categorised as Inferred Resources and of this 720 mt can be extracted by open-cut methods.

“The JV would ensure the coal project in Mozambique is well positioned to exploit the full potential of the Moatize region,” said Riversdale chairman and CEO Michael O’Keeffe. “This was a major consideration for us, and we look forward to working with Tata as the project advances.”