Tata Steel Global Minerals Holdings, an indirect wholly-owned subsidiary of Tata Steel, has raised its stake in Riversdale mining to 19.4% from 15% through market purchases.
Riversdale mining is a joint venture partner of Tata Steel Global Minerals Holdings for a coal project in Mozambique.
The Joint venture has been awarded a mining contract to explore and develop the Benga coal project by the Mozambique government in April this year.
As on April 2009, the Benga Coal Project has estimated coal resources of 4 billion tonnes including 1 billion tonne of measured and indicated resources. Tata Steel has a 35% stake in the JV project and has a 40% offtake agreement of the coal block.
The project is important with respect to Tata Steel’s objective of securing long-term coal linkages for its European operations.
This is a positive development for the company as it is expected to increase the off-take from coal project. We maintain our NEUTRAL recommendation on the stock.