New Delhi: Tata Steel today said it has signed a "definitive agreement" with Australia-based Riversdale Mining to jointly develop a coal project in Mozambique saying coal sourced from it would be mainly used for its Corus plant.

"The coal sourced from the project would be used in Corus plant," Tata Steel Group CFO Koushik Chatterjee said in a tele-conference. He pointed out that a feasibility study was on to ascertain the total reserve of the mine and on its completion, the companies could make realistic financial projections. Tata Steel would pay around 100 million Australian dollars (Rs 351.48 crore) to acquire a 35-per cent stake in the project, apart from a 40-per cent share of the off-take of coking coal, he said.

"Tata Steel is keen to ensure its raw material security and would scout for opportunities wherever they are available," Chatterjee said and pointed out that Mozambique Coal Project is well positioned to help meet the world's cheapest steelmaker's future demands for hard coking coal. Shares of Tata Steel were trading at Rs 823.90, up 2.71 per cent, on the BSE in afternoon trade.

The homegrown steel major would hold a key position in the special purpose joint venture formed to develop the project. The JV would comprise two licences -- Benga and Tete licences -- and cover an area of 24,960 hectares. This investment is a significant step in Tata Steel's initiatives for raw material security and will enhance its long term competitiveness, he added.

Earlier, Riversdale announced that it would raise upto 235 million Australian dollars (Rs 825.62 crore), which would be additional funds to develop the company's projects in Mozambique.

Source : PTI