UPDATE 1-India’s Tata Steel: no decision on Riversdale bid yet

* Says no problem with Rio Tinto buy of Riversdale

* Says would work with any company that assures coal supply

* Says Indian consortium should bid for Riversdale if

* Says scouting for assets in Canada, South Africa,

(Adds details, quotes, byline)

By Prashant Mehra

JAMSHEDPUR, India, Dec 27 (BestGrowthStock) – India’s Tata Steel
(TISC.BO: ), the largest shareholder in Africa-focused miner
Riversdale (RIV.AX: ), has not yet decided whether to counter Rio
Tinto’s $3.9 billion bid for the company, the Indian firm’s
managing director said late Monday.

Speaking to reporters in Tata Steel’s hometown of
Jamshedpur, Hemant Nerurkar said the company had no problem
with Rio Tinto (RIO.AX: ) (RIO.L: ) buying into Riversdale, adding
that Tata Steel was happy to work with any company that assured
it coal supply.

“We are not in Riversdale for financial incentive,”
Nerurkar said. “We want to use coal and we are here to secure
raw material for our Indian and European operations.”

Anglo-Australian miner Rio Tinto last week offered to buy
Riversdale as it seeks to secure coking coal reserves sought
after by steelmakers. [ID:nL3E6NM1LU].
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Dealtalk on potential rivals [ID:nLDE6BM0VE] Scenarios for Tata Steel's options [ID:nSGE6BQ02B] Graphic on Riversdale valuation versus peers: http://link.reuters.com/teg33r Graphic on top Australian mining deals: http://link.reuters.com/huf68q Factbox on tight coal supplies [ID:nL3E6NN0DB] Breakingviews column on Rio's bid approach [ID:nLDE6B50LL] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Tata Steel, the world’s seventh largest steelmaker, owns 24
percent in Riversdale and its director on the miner’s board has
abstained from voting on the deal.

“We have no discomfort with Rio. This company (Riversdale)
needs a strong management and Rio has good management,”
Nerurkar said, but declined to comment on why the director
abstained from a vote.

A rival Indian consortium of five state-run firms is also
eyeing Riversdale, and last week hired Citigroup (C.N: ) to
conduct due diligence on the miner.

“If they are serious, they should make a bid,” Nerurkar
said of the consortium.

The chairman of Coal India, one of the companies in the
consortium, said last week it was not in formal talks with Tata
Steel about a joint bid. But a source familiar with the company
told Reuters the two sides were in talks to discuss either a
joint bid or Tata supporting a bid by the consortium.

Coal India Chairman Partha Bhattacharyya said last week the
consortium had a month to decide on a possible Riversdale bid.

Analysts in India have said Tata Steel should hold on to
its stake in Riversdale to assure coal supplies for its Corus
unit, which does not have any captive raw material supplies.

A debt of around $10 billion on its balance sheet limits
its ability to make big investments, making a bid for the rest
of Riverdale unlikely. [ID:nSGE6BQ02B].


India is expected to emerge as the third-largest consumer
of steel in 2011, after China and the United States. An economy
growing at nearly 9 percent is driving a construction boom in
buildings and infrastructure, and prompting big investments by
global automakers.

In July, Japan’s JFE Holdings (5411.T: ) said it would spend
about $1 billion for a 14.9 percent stake in India’s third
largest steelmaker JSW Steel Ltd (JSTL.BO: ).

State-run Steel Authority of India (SAIL.BO: ) is also
finalising plans to set up joint steel plants with South
Korea’s POSCO (005490.KS: ) and Japan’s Kobe Steel (5406.T: ).

Nerurkar said Tata Steel is looking for raw material assets
in Australia, Canada and South Africa as it races to meet
demand and secure supplies of coal and iron.

Nerurkar also said the firm plans to invest $500 million in
its European operations to improve supply chain and efficiency.

Tata Steel said last week it had received shareholder
approval to raise 70 billion rupees ($1.5 billion). Nerurkar
said on Monday that Tata Steel would decide the form of
fundraising in three to four weeks and would raise the funds by
March 2011. The proceeds would be used mainly to cut debt,
Nerurkar said.

Tata Steel bought Corus, Europe’s second-largest
steelmaker, in 2007 for $13 billion, in the biggest overseas
acquisition made by an Indian company so far.

The steelmaker has global capacity of around 30 million
tonnes — two-thirds of which are from its European unit Corus,
a quarter from its growing Indian operations and the rest from
units and joint ventures in Thailand, Singapore, Vietnam and
the Philippines.
($1=45.25 rupees)
(Writing by Devidutta Tripathy; Editing by Jui Chakravorty)

UPDATE 1-India’s Tata Steel: no decision on Riversdale bid yet