Anglo American has reached an agreement to integrate the Vale-owned Serra da Serpentina iron ore resource into its Minas-Rio operation in Brazil.
The move will see Anglo American maintain control and management of Minas-Rio, including any future expansions linked to the Serpentina resource.
Vale CEO Eduardo Bartolomeo said: “We are pleased to partner with Anglo American to support the growing demand for high-quality iron ore as our clients accelerate their transition to low-carbon-emissions steelmaking.
“Minas-Rio is a Tier-1 asset that will benefit from great synergies with Serpentina’s deposit and Vale’s logistics and we are confident this partnership will unlock significant value to all of our stakeholders.”
Serpentina holds a mineral resource of 4.3 billion tonnes of iron ore, with potential for a total endowment that is more than double the current strike length of Minas-Rio.
The higher-grade iron ore and softer friable ore at Serpentina are expected to lead to lower extraction costs and capital requirements.
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Both Anglo American and Vale will explore these opportunities as per the transaction’s terms.
Vale will invest $157.5m (781.78m reais) and contribute Serpentina to gain a 15% stake in the enlarged Minas-Rio, with adjustments upon completion.
Post-transaction, Vale will receive a proportionate share of Minas-Rio’s production.
Additionally, Vale retains an option to purchase another 15% of the expanded Minas-Rio, contingent on future expansion milestones including environmental licensing and completion of necessary studies.
The deal is due to close in the fourth quarter of 2024, pending regulatory approvals.
Anglo American has disclosed its preliminary results for 2023, with revenues at $30.65bn, a 13% decrease from the previous year’s $35.12bn.
The company’s profit attributable to equity shareholders stood at $283m for the year ending 31 December 2023, a significant slump compared with $4.51bn in 2022.
Its net debt as of 31 December 2023 was $10.6bn, while its annual EBITDA (earnings before interest, tax, depreciation and amortisation) was $9.96bn, a 31% year-on-year drop.
Anglo American CEO Duncan Wanblad said: “The opportunity to partner with Vale to secure a high-quality iron ore resource of this scale and quality, right next door to Minas-Rio, is compelling – particularly given all the physical synergies of our mining and processing infrastructure to create a single optimised operation, combined with the option to access Vale’s rail and port logistics.”
Earlier this month, Anglo American Platinum unveiled a restructuring plan that could put 3,700 jobs at risk across its South African operations.
