CVRD exercises option for Belvedere
Friday, July 20th, 2007
Companhia Vale do Rio Doce (CVRD) announces that it has exercised a call option to acquire a 51% interest in the Belvedere coal joint venture (Belvedere) for US$ 90 million. Subject to the fulfillment of certain conditions, CVRD will pay US$ 45 million to each subsidiaries of Aquila Resources Ltd. (Aquila) and AMCI International AG (AMCI).
Belvedere is an underground coal project, in the southern Bowen Basin region of the state of Queensland, Australia. CVRD conducted an exploration study to assess the geological structure, coal resources, product quality and underground mining conditions as well as the potential mining, processing and logistical requirements for the establishment of a multi-long wall mining operation to produce hard coking and PCI coal. The joint venture shall now undertake a feasibility study with respect to the development of Belvedere.
Under the terms of the joint venture agreement executed with Aquila and AMCI, CVRD has a further option to raise its stake in the project up to 100% by acquiring the remaining 49% interest at a fair market value to be determined at the time of the exercising of the option.
Investment in the coal business is an important part of our strategy and this acquisition is another step towards the building of a strong growth platform. CVRD holds minority stakes in Chinese coal companies and is on the way to start the development of Moatize, a large coal project in Mozambique. After acquiring AMCIâ€™s Australian assets in the first half of this year, CVRD has coal operations in Australia with capacity to produce 8 million metric tons per year, which may be further expanded in the future with the development of the Belvedere project.