Overcoming their strained ties over Rio's acquisition of Riversdale Mining, Tata Steel and the Anglo-Australian miner have signed a licensing agreement for commercial development of an environment-friendly direct iron smelting process.
The agreement was reached even as Rio Tinto announced that it had finally managed to win over Brazil's Companhia Siderurgica Nacional (CSN), a junior partner in Riversdale Mining, acquiring its 19.35 per cent stake for $830 million. Rio's stake in the Australian firm has now gone up to 72 per cent, with Tata Steel holding the rest.
According to the agreement both companies will work together, sharing their existing knowledge of the two technologies that are combined in the new process called HIsarna. It also covers gains from future marketing of the technology that will be made available to both firms, as well as to members of ULCOS, a consortium of European steelmakers.
The project is funded jointly by ULCOS, the European Commission and the Dutch government. A 60,000-tonne pilot plant is being set up at Tata Steel's Ijmuiden steelworks in the Netherlands to test the new technology.
''Commissioning of the HIsarna pilot plant represents a potentially key step towards a compact and low-cost iron making process with a significantly reduced environmental impact,'' said Karl-Ulrich Kohler, managing director and chief executive officer of Tata Steel Europe. ''The plant demonstrates one of the first and most promising ways in which the European steel industry is developing breakthrough technologies in response to the challenge of climate change.''
The HIsarna iron-making process comprises cyclone pre-reduction technology owned by Tata Steel, and Rio Tinto's bath smelting technology. ''This combination offers excellent opportunities for the collection and geological storage of carbon dioxide, ability to utilise lower-cost raw material feeds and the prospect of energy savings through the elimination of stages in the iron making process,'' said Kohler.
Tata Steel, however, has not reacted to the acquisition of the CSN stake by Rio Tinto in the African-focussed coal mining firm, Riversdale. But Rio Tinto has extended its offer period by nine days to April 29, and is expected to further extend it. Riversdale has a mine in South Africa, but more importantly, has a 65 per cent stake in a coking coal project in Mozambique. The total estimated thermal coal reserves in Mozambique add up to 13 billion tonnes.
Both Tata Steel and CSN were keen to increase their stake in Riversdale, to ensure a steady supply of coal for their steel units. However, Rio announced its interest in the Australian miner in December and went about increasing its stake in the firm. Tata Steel, however, has refused to sell its stake.