Anglo American secures Brazilian iron ore asset from Vale

Under the deal, Anglo American will acquire and integrate the Serpentina into its Minas-Rio mine in Brazil. Picture: Supplied

Under the deal, Anglo American will acquire and integrate the Serpentina into its Minas-Rio mine in Brazil. Picture: Supplied

Published Feb 23, 2024


Anglo American, which is curtailing production from Kumba Iron Ore mine in South Africa, has bought the Serra da Serpentina mine from Brazilian miner, Vale, bringing up additional iron ore resources for the company.

Under the deal, Anglo American said in a statement yesterday that it would will acquire and integrate the Serpentina into its Minas-Rio mine in Brazil. Vale will contribute the Seperntina mine and an additional $157.5 million (R3 billion) in cash for a 15% stake in the enlarged Minas-Rio mine, although Anglo American will retain control of the new bigger mine.

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.”

He said the Serpentina ore body offered significant value, including the scope for expansion of production of premium grade pellet feed products the company sells to steel-making customers that are now focusing more on decarbonising their own processes.

The Serpentina mine contains 4.3 billion tons in iron ore mineral resources. It also has a significantly larger total endowment upside that reflects the total strike length of the ore body that is more than twice that of Minas-Rio.

“Serpentina is also of a higher iron ore grade than Minas-Rio’s already high-grade ore and contains predominantly softer friable ore that together are expected to translate into lower unit costs and capital requirements for its extraction,” Anglo American said.

A combination of the two Minas-Rio and Serpentina ore resources offers considerable expansion opportunities, including the potential to double production. Anglo American and Vale will assess the possibility for this under terms of the transaction.

Eduardo Bartolomeo, the CEO of Vale, 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 steel-making.”

He described Minas-Rio as a Tier-1 asset that would benefit from great synergies with Serpentina’s deposit and Vale’s logistics prowess in the region.

He added that Vale was confident that the partnership would unlock significant value for all stakeholders.

“We plan on allocating our share of the high-quality pellet feed to our pellet plants in Brazil and in the future to the Mega Hubs producing iron ore briquettes,” said Bartolomeo.

Under the terms of the transaction between the two mining giants, if the average benchmark iron ore price remains above $100 per ton, or below $80 per ton, for four years, “a purchase price adjustment payment will be made to Anglo American or Vale, respectively, in line with an agreed” formula.

Vale will also have an option to acquire an additional 15% shareholding in the enlarged Minas-Rio for cash if and when certain events relating to a future expansion of Minas-Rio occur. This includes receipt of the requisite environmental licence for an expansion following the completion of a pre-feasibility study (PFS) and feasibility study.

“The enlarged Minas-Rio will have the option to utilise Vale’s nearby rail line and Tubarão port to transport expanded output as an alternative to the construction of a second pipeline to Anglo American’s current port facility at Açu,” explained the two companies in a news release.

The existing pipeline for Minas-Rio crosses the Vale rail network downstream from Minas-Rio, enabling a far shorter second pipeline to connect with the rail corridor to the Tubarão port. However, the transaction, which is expected to be completed in the last quarter of the current year, does not include or affect Anglo American’s 50% interest in the iron ore export facility at the port of Açu.