Vale Sells $763 Million Stake in Moatize Coal Mine to Mitsui & Co.
Brazilian mining company Vale has agreed to sell a 15 percent stake in its Moatize coal project to Japanese trading house Mitsui & Co. The $450 million deal will also include a 50 percent stake in associated rail and port infrastructure for an additional $313 million.
Located in Mozambique, the Moatize mine is one of the largest coal deposits in the world. Since commencing production earlier this year, coal output has increased by 8.4 percent to 2.14 million tons.
“The partial sale of the troubled Moatize mine and logistics project appears to be at a very attractive price for Vale,” said Tony Robson, an analyst at BMO Capital Markets. “The proposed sale would likely make the company net free cash flow break-even for the year.”
The deal includes a 50 percent stake in the Nacala Logistics Corrdior (NLC) rail and port infrastructure. This critical piece of the acquisition will allow shipments of coal from the Port of Nacala – 912 km east of the mine -- and help increase capacity of rail and port shipments.
“The transaction is essential for the continuity of our investment in Mozambique and Malawi as it provides the funding for the completion of the Moatize project and of the NLC,” Vale said in a separate statement.
According to Reuters Africa, Vale will use the proceeds of the sale to fund the expansion of the mine. Mitsui will also be responsible for its share of future mine investments.
The deal is expected to close in 2015 in which Vale will indirectly own 81 percent of the Moatize coal mine and 35 percent of NLC.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.