Tata Steel Managing Director B Muthuraman said in a statement issued here that the company has entered into a memorandum of understanding (MoU) with Australian company Riverdale Mining Ltd, which runs the coal project in Mozambique, to source coking coal to feed Corus steel plants in Britain and Europe and the Tata's units in India.

Tata Steel acquired Anglo-Dutch firm Corus for 12.9 billion dollars this year to become the world's sixth largest steel manufacturer, said Muthuraman, adding that the agreement with Riverdale is in line with its strategy to move towards raw material security for its global business and enhance competitiveness.

The Corus faces high operation costs and its margins have not gone up despite hike in the price of its steel in Europe. Hence, the bid to access coking coal in Mozambique in order to reduce the cost of production, steel industry analysts said.

Besides, regulations in India are not conducive for export of iron ore and coal and therefore the bid to acquire a stake in the Mozambique coal project is aimed at building the resource base for Corus, the Tata Steel MD said.

Meanwhile, Tata Steel is reported to be interested in buying a steel plant in Colombia to mark its presence in Latin America, a region with rising economic growth where the demand for steel is projected to go up considerably, according to London-based organisation Steel Business Briefing.

The Colombian company Siderurgica Nacional has a capacity of 200,000 tonnes of steel per year.