Anglo American has finalised its acquisition of Vale SA’s contiguous Serra da Serpentina iron ore resource, which will be integrated into Anglo’s Minas-Rio operation in Brazil.
When the transaction was announced in February, Anglo said it would continue to control, manage and operate the Minas-Rio mine, including any future expansions that relate to Serpentina.
The company will now work with Vale to incorporate Serpentina into the Minas-Rio operation.
“This is a compelling example of industrial logic – putting together the contiguous resources of Minas-Rio and Serpentina to unlock significant value,” Anglo chief executive officer Duncan Wanblad said.
“Integration will generate material synergies through utilisation of Minas-Rio’s infrastructure to accelerate the development of Serpentina.
“It’s an outstanding resource with a total orebody strike length more than double that of Minas-Rio with a higher iron ore grade than Minas-Rio’s premium grade ore as well as softer, friable ore, which should translate into lower unit costs and capital required for its extraction.”
Under the terms of the agreement, Vale will pay $US157.5 million ($245.7 million) in cash to acquire a 15 per cent stake in the expanded Minas-Rio.
Vale also has the option to grow its shareholding to 30 per cent if specific events related to Minas-Rio’s future expansion take place. The amount Vale would have to pay for the additional 15 per cent will be determined when the option is exercised.
Wanblad said the integration will help Anglo double the amount of premium grade pellet feed products it creates, helping the company’s steelmaking customers decarbonise their processes by extension.
“The Minas-Rio DRI-grade (direct reduced iron) product already sells into one of the most attractive growth and premium segments available in our industry today,” he said.
“The optimal development pathway is already being assessed as part of the pre-feasibility work with new options created by the fact that we will now be able to access Vale’s rail and port logistics.”
The integration ties into Anglo’s plan to focus its attention on copper assets in South America and iron ore assets in South Africa and Brazil. The company recently divested its steelmaking coal business in Queensland to focus on creating a world-class copper and premium iron ore business.