Anglo American has announced its agreement to acquire and integrate the high-quality iron ore resource, Serra da Serpentina ("Serpentina"), owned by Vale SA, into its Minas-Rio mine in Brazil. This acquisition will allow Anglo American to control, manage, and operate the Minas-Rio operation, including any future expansions related to Serpentina. The CEO of Anglo American, Duncan Wanblad, expressed enthusiasm about the partnership, stating that the scale and quality of the Serpentina orebody offer significant value, including the potential to expand the production of premium grade pellet feed products.
Serpentina contains a Mineral Resource of 4.3 billion tonnes of iron ore, with a significantly larger total endowment upside than Minas-Rio. It is also of a higher iron ore grade and contains predominantly softer friable ore, which is expected to result in lower unit costs and capital requirements for its extraction. The partnership with Vale aims to support the growing demand for high-quality iron ore as clients accelerate their transition to low carbon emissions steelmaking. Vale's CEO, Eduardo Bartolomeo, expressed confidence in the partnership, highlighting the synergies between Minas-Rio's deposit and Vale's logistics, which are expected to unlock significant value for stakeholders.
Under the terms of the transaction, Vale will contribute Serpentina and US$157.5 million in cash to acquire a 15% shareholding in the enlarged Minas-Rio. Additionally, Vale will have the option to acquire an additional 15% shareholding in the enlarged Minas-Rio for cash if certain events relating to a future expansion of Minas-Rio occur. The enlarged Minas-Rio will have the option to utilize Vale's nearby rail line and Tubarão port to transport expanded output as an alternative to the construction of a second pipeline to Anglo American's current port facility at Açu. The transaction is expected to complete in Q4 2024, subject to regulatory conditions.
This strategic partnership between Anglo American and Vale represents a significant opportunity to optimize operations, leverage synergies, and meet the increasing demand for high-quality iron ore, while also supporting the transition to low carbon emissions steelmaking.