By IANS
New Delhi : Keeping the momentum going on acquiring global assets, Tata Steel Friday said it would pay $88 million to develop a hard coal project in Mozambique and acquire a significant portion of mining rights there.
For this purpose, Tata Steel has signed a pact with Riversdale Mining Ltd to establish a holding company, which will develop the proposed coking and thermal coal project at key exploration blocks held in Mozambique.
“For this consideration, Tata secures a key position in the joint venture formed to develop the Mozambique coal project, as well as a 40 percent share of the off-take of coking coal,” Tata Steel said in a statement.
“The coking coal derived from this project will be supplied to the Tata Steel group’s facilities in Europe, Asia and elsewhere,” the statement said, adding Tatas may also may partner Riversdale in future opportunities in the area.
“This gives Tata Steel an opportunity to participate in the development of the region as a coal resource for its global operations. This will enhance our long-term competitiveness,” the company’s managing director B. Muthuraman said.
The joint venture comprises two licences, the Benga and the Tete, covering an area of 24,960 hectares. Riversdale Mining holds a total acreage of more than 290,000 hectares in Mozambique.
“The formation of the joint venture with the global steel major Tata Steel would ensure that the coal project in Mozambique is well positioned to exploit full potential of the Moatize region,” Riversdale chairman Michael O’Keeffe said.
“Our overall position and timing could not be better,”
Recently, Riversdale had announced a capital addition of around $200 billion to make additional funds available to develop the company’s projects in Mozambique and emerge as a regional force in the coal markets.
With the recent acquisition of Corus for over $11 billion, Tata Steel has an aggregate crude steel production capacity of around 28.1 million tonnes with approximately 82,700 employees across four continents.
The 100-year-old company, established in 1907 as Asia’s first integrated private sector steel company, is now the world’s sixth largest steel producer in terms of crude steel production.