Riversdale Mining has entered a $1 billion-plus contract with a Chinese state-owned steel maker to set up a second coking coal mine in Mozambique, in hopes to become the world's biggest producer.

"We are positioning Riversdale to be the major player in the coking coal world," Riversdale managing director Steve Mallyon said yesterday after finalizing a deal to give Wuhan Iron & Steel Corporation (WISCO) a 40 per cent stake in the Zambeze coal project.

The company aims to overtake BHP Billiton's Queensland joint venture with Mitsubishi "not in the next two or three years, but over the next 10."

Riversdale won a start on those ambitions yesterday when WISCO entered a non-binding memorandum of understanding to invest $US800 million ($916m) for a 40 per cent interest in Zambeze, pending mining authorizations.

China's third-largest steel producer also consented to take an 8 per cent stake in the company through a share placement for about $160m after a final agreement had been signed.

Additionally, WISCO has committed to help Riversdale secure finance and Riversdale has also settled a logistics and infrastructure partnership agreement with China Communications Construction Company.

"It's a fantastic deal," Hartley analyst Andrew Muir. "The Mozambique coal operations have been heavily reliant on infrastructure and by teaming up with CCCC they can get things like ports and barges in place."

He said that the contract with WISCO would help get finance in place, cut down the share of a projected $2.3bn capital expenditure Riversdale would have to foot, and supply funds to pay its share of development costs.

WISCO will pay Riversdale the $800 million in three trenches. Riversdale will receive $US200 million after signing a definitive agreement, which must take place within 120 days of signing the MoU.

A second payment of $US150m will be made on completion of a feasibility study showing the mine can produce 30 million tonnes of mined coal a year, which analysts expect to translate to about 20 million tonnes of saleable coal.
The final $US450m would be paid on awarding of mining and environmental approvals.

Riversdale Mining has entered a $1 billion-plus contract with a Chinese state-owned steel maker to set up a second coking coal mine in Mozambique, in hopes to become the world's biggest producer.

"We are positioning Riversdale to be the major player in the coking coal world," Riversdale managing director Steve Mallyon said yesterday after finalizing a deal to give Wuhan Iron & Steel Corporation (WISCO) a 40 per cent stake in the Zambeze coal project.

The company aims to overtake BHP Billiton's Queensland joint venture with Mitsubishi "not in the next two or three years, but over the next 10."

Riversdale won a start on those ambitions yesterday when WISCO entered a non-binding memorandum of understanding to invest $US800 million ($916m) for a 40 per cent interest in Zambeze, pending mining authorizations.

China's third-largest steel producer also consented to take an 8 per cent stake in the company through a share placement for about $160m after a final agreement had been signed.

Additionally, WISCO has committed to help Riversdale secure finance and Riversdale has also settled a logistics and infrastructure partnership agreement with China Communications Construction Company.

"It's a fantastic deal," Hartley analyst Andrew Muir. "The Mozambique coal operations have been heavily reliant on infrastructure and by teaming up with CCCC they can get things like ports and barges in place."

He said that the contract with WISCO would help get finance in place, cut down the share of a projected $2.3bn capital expenditure Riversdale would have to foot, and supply funds to pay its share of development costs.

WISCO will pay Riversdale the $800 million in three trenches. Riversdale will receive $US200 million after signing a definitive agreement, which must take place within 120 days of signing the MoU.

A second payment of $US150m will be made on completion of a feasibility study showing the mine can produce 30 million tonnes of mined coal a year, which analysts expect to translate to about 20 million tonnes of saleable coal.
The final $US450m would be paid on awarding of mining and environmental approvals.