New Delhi:Tata Steel is likely to remain invested in Australian mines firm Riversdale, which has received a bid from Rio Tinto, in view of meeting future coal demand from captive sources.
Tata Steel has 24.4% stake in Riversdale and Rio Tinto has put in a bid worth 3.9 billion Australian dollar to buy it.
“Our business model has been such in India where we have 50% of our coal coming from own captive sources. We will continue to be a coal consumer for future for expansion. Therefore, we would want to get that (Riversdale) economic interest,” Tata Steel group CFO Koushik Chatterjee said.
Riversdale has about 13 billion tonnes of rich coking and thermal coal reserves in its Benga and Zambeze projects in Mozambique.
Chatterjee, however, declined to enunciate details of the company’s strategy. “There is a process going on, so it is very difficult to discuss the company strategy specially when we are 24.4% shareholder in a listed company and own 35% of the assets.” he said.
He, however, hinted that board of the company will decide on the future strategy after examining the present value of the asset, among other issues.
“Effectively I would say that it is a strategic asset for us. We are evaluating all the options that we would certainly would like to see development of Benga as the key priority from our perspective.”
Meanwhile, Tata Steel’s follow on share sale offer begins on Wednesday to raise up to Rs 3,477 crore. Koushik reportedly said in Mumbai that the company was open to using a part of the proceeds in a project of Australian miner Riversdale.
Earlier, managing director H M Nerurkar had said that “we have no discomforts with Rio Tinto’s bid for Riversdale. We are watching the situation closely and have not taken any decision (on outbidding Rio Tinto’s offer)”.
He had also said that Tata Steel is interested in ensuring coal supplies from Riversdale for its Indian and European operations and its stake in the company is not for “financial incentives”.
In December 2010, barring Tata Steel’s director in Riversdale, the Australian firm’s board had recommended Rio Tinto’s offer price at 16 Australian dollars per share in December-- valuing it at around 3.9 billion Australian dollars.
Tata’s nominee on Riversdale board, N K Misra, had abstained from voting on Rio Tinto’s bid, sparking off the speculations that company may go for outbidding Rio Tinto’s offer.
Meanwhile, a consortium of five state run companies , International Coal Ventures (ICVL) may decide for bidding for a stake in Riversdale mines, based on ICVL board meeting’s decision on 22 January. The board is meeting to consider the preliminary reports submitted by merchant bankers.
ICVL is a consortium of five state-run companies including SAIL, CIL, NMDC, RINL and NTPC formed for mining assets’ acquisition overseas.