Tata Steel signs JV for Mozambique coal
The Economic Times — November 29, 2007

Tata Steel on Friday signed a joint venture with Australia's Riversdale Mining to develop a hard coking and thermal coal project in Mozambique, company officials said.

Tata Steel is to pay around 100 million Australian dollars (88 million US) to acquire 35 percent of Riversdale's Benga and Tete licences in the southern African country, which is developing into a region of increasing significance for coal.

Coking coal derived from this venture will be delivered to Tata Steel's facilities in Europe, Asia and elsewhere.

The mine is expected to produce 10 million tonnes of coking and thermal coal from 2010.

Tata Steel managing director B. Muthuraman welcomed the deal, saying it gave the company a chance to participate in developing the region as a coal resource for its global operations.

This will enhance Tata Steel's long-term competitiveness, he said. "Tata Steel has vast experience of coal mining spanning over several decades and will be contributing technical expertise to the joint venture," Muthuraman said.

Muthuraman said he expected consolidation of the raw materials and steel sectors to continue, noting that BHP Billiton's three-for-one merger proposal with rival Rio Tinto "fits in" with this trend and is a "logical" deal. Riversdale has raised an additional 235 million Australian dollars to develop the Mozambique resource, which is estimated to represent around 1.225 billion tonnes of coal.

Chairman Michael O'Keeffe welcomed Tata Steel's involvement.

"Riversdale has a dominant land holding in a coal region of increasing global significance, a supportive government and a strategic joint venture partner of similar standing in Tata Steel," Riversdale chairman Michael O'Keeffe said.

"Our overall position and timing could not be better." Tata Steel is the world's sixth largest steel maker.