Vale agrees on new terms for sale of some Mozambique assets to Mitsui

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Vale agrees on new terms for sale of some Mozambique assets to Mitsui

8:18 CAT | 30 Sep 2016

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Mitsui & Co. agreed with resource group Vale to purchase stakes in a Mozambique coal mine and associated rail and port facilities for about US$770 million.

Mitsui will acquire a 15% stake in the coal mine and a 35% interest in the rail and port project from the Brazilian company. In December 2014, the Japanese trading house decided to buy into the coal mine and the railway and port infrastructure, planning to pay around $940 million at the time.

The coal mine investments were initially estimated at approximately US$630 million. However, Mitsui will pay only US$255 million, reflecting such factors as a 30% drop in the price of coking coal in 2015. Meanwhile, the outlay on the infrastructure portion of the deal rose slightly from US$310 million originally as construction delays pushed up costs.

The mine’s high-quality coal for steelmaking will be transported by rail to the Nacala port some 900km away for export to such countries as Japan. The railway and port will serve as key infrastructure for exports of not only coal but also domestically produced grains, and for imports of various resources.

The mine’s coal output, some 5 million tons in 2015, will grow to 18 million tons by 2018. This will increase procurement options for Japanese steelmakers, who rely mostly on Australian coal.

Source: Nikkei