Prized Possession

Calcutta, Oct. 19: Tata Steel’s coal assets in Mozambique are getting bigger by the day. The latest survey shows a 200-million-tonne increase in reserves which are in the Benga region of the country.

Australia’s Riversdale Mining, which Tata Steel has partnered for the Mozambique project, has announced its coal reserves to be 2.1 billion tonnes. This is the second time the reserves have been increased within the Benga licence where Tata Steel has a 35 per cent stake. Riversdale holds the rest.

The Indian company, which acquired the coal asset primarily to service Corus’s European facilities, paid about $86 million for the stake.

When Tata Steel had signed the joint venture agreement with Riversdale in November 30, 2007, the projected reserves in Benga were 1.2 billion tonnes. This was later raised 58 per cent to 1.9 billion tonnes in June this year. It has now been further increased to 2.1 billion tonnes, an increase of 200 million tonnes.

To put it in perspective, the coal blocks allocated in India for steel, power and cement have not crossed the one-billion-tonne mark. Moreover, they are allotted on a sharing basis, meaning that bigger the reserve, the higher is the number of users.

According to Riversdale, 83 per cent of the reserves in Benga licence are less than 500 metres deep. The miner will be able to extract 1.76-billion-tonne coal through the open-cut method.

In India, especially in Bengal, steel companies get licence for blocks where coal cannot be extracted through the open-cut method, which is cheaper than deep-pit mining.

Riversdale plans to produce 20-million-tonnes run of mines coal from the block in Mozambique, which is on the southeastern coast of Africa. Run of mines coal needs to be processed before becoming usable for the industry. A mining study has been submitted to the local government for consideration.

The new reserve is the result of months of exploratory drilling in the area.

Benga licence, which is close to a mine of Brazil’s Vale (formerly Companhia Vale do Rio Doce) — one of the world’s largest mining group — is expected to produce both hard coking coal for use in blast furnaces of steel plants and thermal coal for power generation.

The hard coking coal will have a 10.5-per-cent ash content, while the thermal coal will have an ash content of 20-35 per cent.