HomeEnergy MineralsTata Steel may buy coal from Mozambique

Tata Steel may buy coal from Mozambique

Drill team at work
at Riversdale’s Benga
project in Mozambique
Mumbai, India — MININGREVIEW.COM — 02 November 2009 – Tata Power Company “’ India’s biggest electricity generator outside state control “’ may buy coal from a mine in Mozambique which is being developed by Australian-based and listed mining company Riversdale Mining Limited, in order to secure fuel supplies.

“Tata Power is one of the many interested Indian off- takers for our thermal product,” Riversdale managing director Steve Mallyon said in a statement e-mailed through the company’s external public-relations agency. “There is also growing interest from a number of Indian cement producers because of the product’s energy content.”

Tata Power is looking for new sources of fuel as Indian utilities plan to double generation capacity in the next seven years. The company paid US$1.3 billion (R10 billion) in March 2007 to buy stakes in two Indonesian coal mines owned by PT Bumi Resources.

“It makes sense for Tata Power to look for coal from different sources,” Antique Stock Broking analyst Abhineet Anand, said by telephone from here. “They may need more coal than can be supplied by the Bumi venture for their future projects.”

“We believe people should make adequate arrangements where coal is available, whether it’s out of Indonesia, Mozambique or Australia, rather than depend purely on short-term markets,” Tata Power executive director for finance S. Ramakrishnan told reporters here.

Riversdale and Tata Steel Limited “’India’s biggest producer of the metal “’ recently approved the development of a US$270 million (R2.1 billion) coal mine in Mozambique with first production scheduled for next year.

Production in the first stage of the Benga project will be an estimated 1.7 million tonnes of coking coal and 300 000 tonnes of thermal coal for export, Sydney-based Riversdale said in a statement to the Australian stock exchange last week.

The venture is considering a second-stage expansion by 2014 to boost output to 3.3 million tonnes of coking coal, used in steelmaking, and 2 million tonnes of thermal coal, used by power stations. Tata Steel owns 15% of Riversdale.