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Tata Steel signs JV with Riversdale Mining for Mozambique Coal Project

Monday, December 3rd, 2007

Riversdale Mining Limited and Tata Steel Limited have signed an agreement to establish a special purpose joint venture vehicle (“JV”) to develop a hard coking and thermal coal project at key coal exploration tenements held by Riversdale in Mozambique.
Under the terms of the agreement, Tata will pay AUD100 million (approximately 88.2 million USD) to acquire a 35% Project Interest. For this consideration, Tata secures a key position in the JV formed to develop the Mozambique Coal Project, as well as a 40% share of the off-take for coking coal.
Tata will also have the option to participate above this level of tonnage, and may participate with Riversdale in future opportunities on Riversdale’s surrounding tenements.
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.
Riversdale Mining had recently announced a major coal resource in the Benga Licence. Based on the drilling results undertaken by Riversdale, the total Resource is estimated at 1.225 billion tonnes categorized as Inferred Resources and is in accordance with the JORC Code 2004. Of this, a total of 720 million tonnes is considered to have the potential to be extracted by open-cut methods.
The coking coal derived from this project will be supplied to the Tata Steel Group’s facilities in Europe, Asia and elsewhere.
At the signing ceremony in Sydney on 30 November 2007, Riversdale Chairman and CEO Mr Michael O’Keeffe said that the formation of the Joint Venture with the global steel major Tata Steel would ensure the coal project in Mozambique was well positioned to exploit the full potential of the Moatize region. The value of Tata’s on-the-ground experience should not be under-estimated for a project of this scale. This was a major consideration for Riversdale, and we look forward to working with Tata as the project advances.
“The JV with Tata Steel represents the best possible outcome for these tenements in Mozambique. The global steel business of Tata has an increasing need to source coal, and the Mozambique Coal Project is well positioned to help meet their future demands for hard coking coal.” Riversdale recently announced a capital raising that will see up to AUD235 million (approximately 206.988 million USD) of additional funds available to develop the company’s projects in Mozambique. “We are in an extremely strong position to develop into a regional force in the coal markets. Riversdale now has an extensive portfolio of tenements in Mozambique of over 290,000 hectares (1,120 square miles), an initial JORC Code compliant inferred resource of over 1.2 billion tonnes of coal, a strategic partner in Tata Steel, and over AUD300 million (approximately 264.24 million USD) of funding to advance its interests in the region,” Mr O’Keeffe said.
“Riversdale has a dominant land holding in a coal region of increasing global significance, a supportive government and strategic joint venture partner of similar standing in Tata Steel. Our overall position and timing could not be better,” Mr O’Keeffe said.
Mozambique is fast-becoming a region of global significance for the coal sector. In addition to Riversdale and Tata Steel’s involvement, one of the world’s largest mining groups, Companhia Vale do Rio Doce (“CVRD”) has also invested significantly in plans to advance a massive coal project next to Riversdale’s tenements in Moatize.
The Managing Director of Tata Steel Limited, Mr B Muthuraman said: “Tata Steel is very pleased to have signed this agreement. Tata Steel has vast experience of coal mining spanning over several decades and will be contributing technical expertise to the Joint Venture”. Mr Muthuraman further stated that this investment is a significant step in Tata Steel’s initiatives for raw material security. It gives Tata Steel an opportunity to participate in the development of the region as a coal resource for its global operations. This will enhance Tata Steel’s long term competitiveness. Mr Muthuraman further added that it is Tata philosophy to participate and be a part of a country’s development process and Tata Steel through its well known and well acknowledged social initiatives will make a positive impact on improving the quality of life of the people of Mozambique.
For further information visit: www.tatasteel.com

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