Wisco invests in Riversdale's Zambeze coking coal project
By Joyce Pan |
June 25, 2010, Friday
|
Print Edition
Print Edition
WUHAN Iron and Steel (Group) Corp, or Wisco, has agreed to buy 40 percent of the Zambeze Coal Project for US$800 million from Australia-listed coal developer Riversdale Mining.
Under a non-binding memorandum of understanding, the Chinese mill has the right to purchase at least 40 percent of the coking coal produced at the Zambeze project and at least 10 percent of that produced at Riversdale's Benga project, also in Mozambique in south Africa, at market prices, the Sydney-based company said in a statement on its Website.
Riversdale also signed a logistics partnership agreement with China Communications Construction Co to help develop the infrastructure required to export large tonnages of coal products from the Zambeze project to export markets, including China, India and potentially Brazil.
Also as part of the deal, Wisco will invest in an 8 percent equity stake in Riversdale at A$10 (US$8.70) per share. Its 8 percent stake in Riversdale will come from the Australian firm issuing new shares.
The Zambeze coal mine is claimed to be one of the largest undeveloped sources of coking coal in the world with 9 billion tons of indicated and inferred resources. The deal values Zambeze at US$2 billion.
"The project has the potential to become an important source of coking coal for China, and it is based in a region that we recognize to be strategically significant for our future goals," said Kuang Zhongxiang, general manager of Wisco International Resources Development and Investment Corporation. "Mozambique is an attractive investment location and has potential to be a significant source of coking coal."
Coking coal, turned into coke and used in blast furnaces, is the key ingredient with iron ore in steelmaking. Steel mills have been seeking coking coal projects worldwide to secure the resource as quality coking coal is getting scarce with rising demand.
Under a non-binding memorandum of understanding, the Chinese mill has the right to purchase at least 40 percent of the coking coal produced at the Zambeze project and at least 10 percent of that produced at Riversdale's Benga project, also in Mozambique in south Africa, at market prices, the Sydney-based company said in a statement on its Website.
Riversdale also signed a logistics partnership agreement with China Communications Construction Co to help develop the infrastructure required to export large tonnages of coal products from the Zambeze project to export markets, including China, India and potentially Brazil.
Also as part of the deal, Wisco will invest in an 8 percent equity stake in Riversdale at A$10 (US$8.70) per share. Its 8 percent stake in Riversdale will come from the Australian firm issuing new shares.
The Zambeze coal mine is claimed to be one of the largest undeveloped sources of coking coal in the world with 9 billion tons of indicated and inferred resources. The deal values Zambeze at US$2 billion.
"The project has the potential to become an important source of coking coal for China, and it is based in a region that we recognize to be strategically significant for our future goals," said Kuang Zhongxiang, general manager of Wisco International Resources Development and Investment Corporation. "Mozambique is an attractive investment location and has potential to be a significant source of coking coal."
Coking coal, turned into coke and used in blast furnaces, is the key ingredient with iron ore in steelmaking. Steel mills have been seeking coking coal projects worldwide to secure the resource as quality coking coal is getting scarce with rising demand.
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