Tata Steel ally finds coal vein in Africa

Riversdale Mining, Tata Steel's partner in Australia, has discovered around 1.2 billion tonnes of coal at northern Benga in the Moatize district of Mozambique, which happens to be the world's largest unexplored coal province The exploration results assume significance since they will help strengthen Tata Steel's coal security, which has dropped to 15 per cent since the acquisition of UK steelmaker Corus.

Responding to a questionnaire, a Riversdale spokesperson said, "Tata Steel, through its memorandum of understanding (MoU) with Riversdale, has access at a Benga region that has a resource that could be of immense potential value in feeding Tata Steel's coking coal needs in years ahead."

A Tata Steel spokesperson said, "This was a very positive development and would help meet the needs of Tata Steel and Corus. The inferred resource is based on several months of exploration and drilling programmes undertaken by Riversdale."

The Benga licence covers an area of 4,560 hectares and represents less than two per cent of Riversdale's total tenement areas (23 licences with an area exceeding 290,000 hectares).

In total, Tata Steel would have an interest in 25,000 hectares with Riversdale. The agreement between the two companies covers hard coking coal for Tata's steel business and also export quality thermal coal.

Under the terms of the MoU, Tata Steel would acquire a 35 per cent interest in two of Riversdale's key Mozambique exaploration tenements, including the Benga licence as well as offtake rights to 40 per cent of the coking coal produced.

With the resource determined, Riversdale plans to take the project to the next level and fully exploit the potential of the region. Along with Tata Steel, Riversdale would develop the mine and fast-track the infrastructure planning and marketing.

According to a presentation after acquiring Corus, Tata Steel had said that the company's stand-alone coal security was 60 per cent and with Corus it stood at 15 per cent.

However, in three-five years, coal security was expected to reach 25 per cent thanks to the brownfield Jamshedpur and greenfield Orissa projects. But in the long-term, Tata Steel wants to achieve a coal security of 60-80 per cent, in phases.