In the last 11 months, a Singapore-based subsidiary of Tata Steel has moped up 19.38 per cent stake in Australian mining firm Riversdale in four open market share purchases. With the last transaction on Tuesday of buying about 85 lakh shares, valued around Rs 213 crore at market price, the subsidiary named Tata Steel Global Minerals Holdings has increased its share volume to 36.74 million.
Tata Steel already has an association with Riversdale, signing a $100 million agreement for a 35 per cent stake in two coal tenements of the Australian mining company in Mozambique in 2007. The agreement gives Tatas the right to buy 40 per cent of coal produced from the two fields.
“Production is targeted to commence no later than 2014,” Riversdale Mining Managing Director Steve Mallyon said in a recent filing to the Australian Stock Exchange. Denying the market speculation that Tata Steel might increase its stake Australian miner to majority, the spokesperson said the company has no such plans.
However, the global steel business of Tatas, including Anglo-dutch steel maker Corus, has an increasing need to source coking coal, a raw material for steel making, and the coal projects of Riversdale will help meet their future demands for hard coking coal, said a Mumbai-based industry analyst.
Ratan Tata, chairman of Tata group, said in the 2008 annual general meeting of Tata Steel that the price of raw materials like iron ore and coking coal had increased by 85 per cent and 200 per cent, respectively.
Thus, the company is keen to achieve raw material security for controlling steel prices, said Tata.
With the first purchase of 13.71 million shares, or 7.29 per cent stake, in September 2008, TS Global became a substantial shareholder in Riversdale according to the ASE standards. The company had spent around Rs 450 crore for the first purchase, as per the share prices in late September.
The second transaction was in October 2008, when the company’s stake rose to 10 per cent and in April 2009, it further increased to 14.99 per cent. At the current market price of Riversdale at AUS $6.45 a share, Tata Steel’s 19.38 per cent stake would be valued at Rs 924 crore.
Separately, another substantial stake holder in Riversdale, Talbot Group, is also increasing stake in the company. With the latest transaction, the stake of Talbot went to 18.87 per cent.
Riversdale owns a 74 per cent share of two anthracite projects in South Africa. In October 2006, the company acquired Africoal Mozambique Limitada through its wholly owned subsidiary Riversdale Energy (Mauritius), and thereby the ownership of large coal tenements in Mozambique in the Zambezi basin.
The Company recently acquired coal tenements from Aquila Resources, located in the Tete province, contiguous with tenements already held in Mozambique by Riversdale. The acquisition positions Riversdale as the largest tenement holder in Tete-Moatize, with an extensive area capable of supporting long life operations in this emerging and highly prospective region.
