Mozambique: Vale Announces Sale of Mozambique Coal Assets

The Brazilian mining company Vale has announced that it is selling its Mozambican coal assets and the associated Nacala Logistics Corridor to the Indian company Vulcan for US$270 million. In addition, the two companies have agreed to a ten-year royalty agreement that is subject to certain mine production and coal price conditions.

Earlier in 2021, Vale announced its decision to sell the assets and to focus on its core businesses and on its ambition to become a leader in low-carbon mining. This followed over a decade of developing the Moatize mine in the western province of Tete and the building of the 912-kilometre long Nacala Logistics Corridor railway line which runs from Moatize, through neighbouring Malawi, to the deep-water port at Nacala-a-Velha.

According to a statement from the company, these investments, along with revamping the general rail cargo operations and passenger transportation "represent a relevant legacy to the countries and are an important driver for local development".

The chief executive officer of Vale, Eduardo Bartolomeo, stated: "I am pleased to announce this important step for the responsible divestment of Moatize and Nacala Logistics Corridor, in a transaction that benefits the communities and governments where those operations are located andoffers a sustainable future for the operations".

The assets have been sold to Vulcan, which is part of the Indian Jindal Group that already operates its Chirodzi open cast coal mine in Tete with a capacity to mine 5 million tonnes per year. Vale's Moatize mine has the capacity to produce 15 million tonnes per year.

US$270 million is about 10 per cent of what Vale and its partners borrowed from banks in the days when coal appeared to have a future. At the turn of the millennium, coal was hailed as a possible saviour of the Mozambican economy. But the hoped-for exports of over 100 million tonnes of coal a year never materialised, and nor did the coal-fired power stations that several companies promised to build at the entrance to their mines.

The sale is subject to approval from the Mozambican government.

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