Tata Steel on Thursday said it would divest its entire stake of 26.27 per cent in Riversdale Mining to Anglo-Australian mining group Rio Tinto for A$ 1.06 billion ($1.12 billion; or about Rs 5,000 crore).

The move follows Rio Tinto's plans to delist Riversdale after taking over control of the company this April. Rio Tinto holds a 73.20 per cent stake in the Australian mining firm which has significant interests in South Africa.

“Tata Steel has decided that it would not hold its equity investment in Riversdale Mining which is proposed to be delisted, without any joint venture agreement with the majority shareholder,” the company told the Bombay Stock Exchange.

The sale consideration of about A$ 1.060 billion represents around 100 per cent appreciation of value in less than four years since the first investment, the company said. The investment is held by Tata Steel Global Minerals Holding Pte, a Singapore-based wholly owned subsidiary of Tata Steel.

Mauritius venture

However, the steelmaker plans to continue to be a part of its Mauritius-based joint venture with Riversdale Mining, called Riversdale Energy, it added.

“Tata Steel continues to focus on its current holding of 35 per cent in Riversdale Energy (Mauritius), which owns coal assets in Mozambique. Tata Steel would look forward to work with Rio Tinto and discuss in good faith ways to enhance its participation in the Benga Joint Venture based on the framework captured in the agreement between Tata Steel and Riversdale Mining,” said the statement.

The announcement came after markets closed for the day. Tata Steel shares on the BSE were down 1.44 per cent at Rs 553.15.

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