All change for Vale in Brazil as it moves to sell manganese and iron ore mines

All change for Vale in Brazil as it moves to sell manganese and iron ore mines

Brazil's Vale has agreed to sell its manganese and iron ore mines worth in central Brazil to holding company J&F Investimentos. 

Blue View

The Centre-West system, which includes Mineração Corumbaense, Mineração Mato Grosso, International Iron Company and Transbarge Navegacion ventures, produced 2.7Mt of iron ore and 200kt of Mn ore in 2021.  The enterprise value is being put at US$1.2Bn suggesting an 11x multiple of 2021 EBITDA.

Vale concurrently announced that it had signed an agreement with the government of the northern Brazilian state of Pará to build a “green” pig iron plant in the city of Marabá, near its Carajás iron ore mine.  The mine forms part of the Serra Norte mining complex and Vale’s Northern System.  The plant represents the first commercial application of technology developed by Vale’s wholly-owned subsidiary Tecnored, which reduces the carbon footprint of traditional steelmaking production processes.  The Tecnored plant in Marabá will have an initial annual production capacity of 250ktpy of pig iron, though the company believes output could eventually reach as much as 500ktpy. Vale has committed about US$345M CAPEX, with start-up planned for 2025.

Both sets of new reinforce Vale’s stated aim to focus on core business and growth opportunities as well as increased the company’s ESG credentials.  Vale has committed to reduce Scope 1 and 2 emissions by 33% by 2030, net Scope 3 emissions by 15% by 2035 and achieve net zero by 2050.