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Tata Steel will begin coal shipments from its Benga mines project in Mozambique by the month-end, the company has said in a presentation to analysts.
Tata Steel expects to ship 850,000 tonnes of coking coal and 200,000 tonnes of thermal coal in 2012-13. The coal will feed Tata Steel’s Europe (Corus) operations.
Tata Steel has 35 per cent stake in the Benga project. It paid $88.2 million in 2007 for the stake. The rest is held by Riversdale Mining Ltd, which is now almost 100 per cent owned by Rio Tinto, the Australian mining giant. (Tata Steel had a 26.27 per cent stake in Riversdale, which it sold to Rio Tinto last year for Rs 4,942 crore.)
The Benga concession has the potential to yield 720 million tonnes of coal.
No direct positive impact seen
The commencement of coal shipments from the Benga project is, however, not likely to have a direct positive impact on Tata Steel’s European operations. This is because the supply of coal will be on “arm’s length” basis, that is, at market-determined prices. However, an analyst at Edelweiss Securities said the effect of Benga will be felt “at the consolidated level”.
Tata Steel has said it expects demand for steel to increase 6.9 per cent in the current year compared with 4 per cent last year, when the consumption was 70.914 million tonnes.
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