Tata Steel to retain its stake in Riversdale: Muthuraman

Tata Steel today said it will remain invested in Australian mining firm Riversdale, which was acquired by global mining giant Rio Tinto early this month.     

Without elaborating, Tata Steel's Vice Chairman B Muthuraman merely replied in the affirmative when asked whether the Indian steel major will continue to hold a stake in Riversdale.     

"Yes," he said in reply to the query on the issue, which assumes significance in the wake of Rio Tinto's announcement last week that it has extended the takeover offer to April 29 for Riversdale shareholders.    

 
Last week, Rio had said that it has acquired a 72% stake in the Australian mining firm and purchased the entire stake (19.9%) of Brazilian steel maker CSN -- another big shareholder in the Australian mining firm.     

Tata Steel, with a stake of 27.14% in Riversdale, is the second largest shareholder in the company currently.     

The announcement of Rio had triggered speculation that Riversdale may get delisted from the Australian Stock Exchange as very few shares have been left for trading on the bourses.     

However, Muthuraman declined to comment further on the issue.     

Riversdale has been a takeover target for Rio Tinto since last December, when it put in a bid of AUD 16 per share to acquire a majority stake in the Australian mining firm.     

However, Rio only managed to acquire majority stake in Riversdale early this month due to stiff resistance from both Tata Steel and CSN, which used to hold a 19.9% stake.     

Tata Steel had stated on earlier occasions also that it would stay put in Riversdale as its focus is mainly on getting coal rather than just making a quick buck, as the Australian mining firm holds an estimated 13 billion tonnes of thermal coal reserves in two projects in Mozambique.    

Tata Steel, which has over 28 million tonnes per annum steel-making capacity now, needs to have coking coal, an important steel-making raw material, to feed its operations across geographies.     

Within India also, Tata Steel is enhancing steel-making capacity to 10 million tonnes per annum at its Jamshedpur facility from 6.8 mtpa now.     

Rio had put in the takeover bid at AUD 16 per share for Riversdale in December last year. The offer was cleared by the Riversdale Board in January, encouraging company shareholders to accept the bid in the absence of any other better offer.     

Following the acquisition of the targeted 47% stake in the company at AUD 16 a share, Rio Tinto sweetened its offer to Riversdale shareholders to AUD 16.50 per share to get hold of holding in the company.