UPDATE: Riversdale In $200 Million Deal To Sell Coal To Trafigura
June 03 2011 - 2:57AM
Dow Jones News
Riversdale Mining Ltd. (RIV.AU) said Friday it has struck a deal
to sell thermal coal from its developing Benga mine in Mozambique,
securing revenue for the largely coking coal operation as it ramps
up output.
The Australian company, which is majority owned by mining giant
Rio Tinto PLC (RIO), said it has a entered a "take-or-pay"
agreement with commodities trader Trafigura for all thermal coal
that will be produced in the first stage of developing the Benga
mine, which is due to start production later this year.
The agreement is worth more than US$200 million at forecast
prices.
The coal will be linked to the benchmark reference price for
coal exported out of South Africa's Richards Bay terminal, and the
deal includes options to increase the tonnage as production
increases at the mine, Riversdale said.
"The agreement assists in underwriting the critical first stage
of growth and production at Benga and provides us with exposure to
the strong fundamentals of the seaborne thermal coal market," Steve
Mallyon, managing director of Riversdale, said in a statement.
Coal is a relatively new business for Trafigura, which has
agreements to source the fuel from Australia, Colombia, Indonesia,
Russia and South Africa. Demand for both coking coal used in
producing steel and thermal coal for power stations is strong from
rapidly industrializing economies in Asia, particularly China and
India.
Rio Tinto has secured a slightly more than 73% stake in
Riversdale in an offer launched in December that is due to close
Friday, although it has been extended several times in an effort to
mop up the few shares not held by the Anglo-Australian company or
India's Tata Steel Ltd. (500470.BY). Tata has a stake of about 26%,
as well as one member on Riversdale's board and an agreement for
40% of the coking coal produced at Benga.
Riversdale has estimated at least US$400 million will be needed
for its share of costs for the second and third stages of
developing the Benga project and at least US$2.9 billion for the
Zambeze project in Mozambique, which is at an earlier stage of
development. The two projects together have an estimated resource
of 13 billion metric tons of coal.
-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094;
robb.stewart@dowjones.com
Riversdale Mining (ASX:RIV)
Historical Stock Chart
From Apr 2024 to May 2024
Riversdale Mining (ASX:RIV)
Historical Stock Chart
From May 2023 to May 2024