Rio Tinto has completed the sale of Rio Tinto Coal Mozambique to International Coal Ventures (ICVL) following the fulfillment of all conditions precedent and receipt of the necessary regulatory approvals.
The deal worth $50 billion, announced on 30 July 2014, comprises the Benga mine and other coal projects in the Tete province of Mozambique.
Rio Tinto’s other assets in the country remain unaffected by the transaction, said the company in a statement on Wednesday.
Plan to triple production
International Coal Ventures (ICVL) plans to triple production the Benga mine in Mozambique the company announced following its takeover bid of the Benga coal mine.
ICVL unveiled its plans for the mine in August, revealing that it would spend $300 million on the expansion of coal production at the Benga mine.
ICVL chairman CS Verma was quoted by The Times of India as saying: “The Benga mine currently produces five million tonnes per annum and our first priority is to ramp this up to 11 to 12 million tonnes in the next three to four years, and to 16 million tonnes over the next four to five years.”
Tripling production will take Benga’s output up to 13-million tonnes a year.
Rio Tinto held a 65% of Benga, which it acquired from Australian junior Riversdale Mining in 2011 for $4.1-billion, with the remaining stake owned by the state.
The company has since 2011 had to write down $3.47-billion of that investment.
The Mozambique operation has reserves of 2.6-billion tonnes – 70% which is metallurgical coal used in making steel.
The operating coal mine comes with a state of the art wash plant and surface infrastructure with a potential to expand raw coal production from the current 5 Mtpa to 12 Mtpa.
“The Mozambique acquisition by ICVL is a significant and historic development towards assuring long-term coking coal security as Indian steel companies need higher input of raw material to fuel their growth,” said Verma at the announcement of the deal.
“Mozambique has the geographical advantage of being in proximity of India. This acquisition gives the steel companies under the Ministry of Steel a strong foothold in this sought after coal basin,” he said.