Vale to acquire stake in Anglo American’s Brazilian operations

Vale has announced a landmark agreement with Anglo American to acquire a 15% ownership stake in Anglo American Minério de Ferro Brasil, marking a strategic partnership that encompasses the renowned Minas-Rio complex and Vale’s Serra da Serpentina resources in Brazil. This significant move, valued at US$ 157.5 million, includes a supplemental cash disbursement by Vale and is aimed at enhancing the production and distribution of high-quality iron ore, addressing the growing demand for low carbon emission steelmaking materials.

Eduardo Bartolomeo, CEO of Vale, emphasized the partnership’s potential to unlock significant value for stakeholders by leveraging synergies between Minas-Rio’s assets and Vale’s logistical capabilities. He highlighted the plan to allocate the high-quality pellet feed to Vale’s pellet plants in Brazil and potentially to the Mega Hubs for producing iron ore briquettes in the future.

Duncan Wanblad, Chief Executive of Anglo American, lauded the partnership’s compelling nature, especially given the physical synergies of their mining and processing infrastructure. He pointed out the Serpentina orebody’s scale and quality as a significant value proposition, offering an opportunity to expand the production of premium grade pellet feed products essential for decarbonizing steelmaking processes.

Strategic Partnership and Acquisition Unveiled by Vale and Anglo American in Brazil

The transaction terms include Vale contributing Serpentina high-grade iron ore resources and a cash disbursement, with adjustments based on net debt and working capital variation at closing. Additionally, a purchase price adjustment mechanism is in place, contingent on the average benchmark iron ore price movements. The completion of this transaction is subject to customary corporate and regulatory approvals, expected by the fourth quarter of 2024.

Post-transaction, Vale will receive its pro-rata share of Minas-Rio production and hold an option to acquire an additional 15% shareholding in the enlarged Minas-Rio under certain conditions, including future expansions and environmental licensing.

Minas-Rio, with a nameplate capacity of 26.5 million tonnes per year of high-grade pellet feed, has potential for expansion up to 31 million tonnes in its current configuration. In 2023, Minas-Rio produced 24 million tonnes of iron ore, contributing US$ 1.4 billion in EBITDA. The Serra da Serpentina deposit, located adjacent to Minas-Rio, contains an estimated 4.3 billion tonnes of resources, offering significant expansion opportunities.

The partnership between Vale and Anglo American signifies a strategic initiative to enhance their position in the global iron ore market, focusing on sustainable and high-quality production to meet the evolving needs of the steelmaking industry.