Tata Steel has bought about 7.3% stake in Riversdale Mining, which owns coal blocks in Mozambique, for $120.7 million, taking its total stake to 42.3% in the company.
The equity stake was bought from the open market. Tata Steel had bought 35% stake in the mining project last year in two coal tenements in exchange of the right to buy 40% of the coal produced.
Post the sale of the 35% equity stake to Tata Steel, Riversdale is expected to continue exploration drilling on the Benga licence, along with Tata Steel. This is in line with the company’s strategy to increase raw material security globally.
We maintain a BUY on the stock, with a target price of Rs875.