Anglo American adds iron ore capacity at Minas Rio

Market: Metals
22/02/24

UK-South African mining firm Anglo American will integrate the Serra da Serpentina iron ore resource, owned by Brazilian producer Vale, into its nearby Minas Rio operations in Brazil.

The deal, expected to concluded by this year's fourth quarter, has Vale contributing the Serra da Serpentina operations and $157.5mn in cash to acquire a 15pc shareholding in the enlarged Minas Rio. Anglo American will continue to control, manage and operate Minas Rio, including any future expansions.

Serra da Serpentina has an estimated resource of 4.3bn t. Minas Rio's pellet feed ore production was 24mn t in 2023, up by 12pc from a year earlier.

Vale will receive its pro rata share of Minas Rio production with completion of the deal. It will also have an option to acquire an additional 15pc stake in the enlarged Minas Rio for cash, if and when certain events relating to a future expansion of Minas Rio occur.

If the average benchmark iron ore price, or the 62pc Fe cfr China price, remains above $100/t or below $80/t for four years, a purchase price adjustment payment will be made to Anglo American or Vale respectively, in line with an agreed formula and up to certain limits.

The Argus 62pc cfr China index averaged $119.62/dry metric tonne (dmt) last year, compared with $120.11/dmt in 2022. The year-to-date index average is $131.86/dmt. The Argus 65pc cfr China index averaged $131.88/dmt last year, down from $138.74/dmt in 2022. The year-to-date index average is $143.78/dmt, although prices have come off since December in line with thin steel margins.

By Deepali Sharma

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