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Vale buys Mitsui’s Mozambique coal

interests for $2 ahead of divestment

MOZANBIQUE BRAZIL’S Vale is to buy Mitsui & Co.’s 15% stake to potential annual savings of approximately
in Mozambique’s Moatize coal mine and its 50% $25mn.
interest in the Nacala Logistics Corridor (NLC) Following the acquisition of Mitsui’s stakes,
for $1 each. Vale aims to begin the process of divesting its
The deal allows Mitsui to divest its interests in participation in the coal business.
Mozambique’s coal business, and also paves the It wants to maintain operations at the Moa-
way for Vale to consolidate its coal interests in the tize mine and the NLC and to find a buyer that is
country ahead of a sell-off. interested in those assets.
Vale said that the transaction was in line with Meanwhile, Vale said that it had been imple-
its focus on its core businesses and ESG agenda, menting two initiatives that are expected to pro-
which calls for it to become carbon neutral by duce sustainable results at the Moatize mine: a
2050 and reduce 33% of its scope 1 and 2 emis- new mining plan and a new operational strategy
sions by 2030. for the coal processing plants.
The two sides signed a heads of agreement The new mining plan prioritises ore bodies
(HoA) that establishes the main terms for the of better quality and has a better stripping ratio,
acquisition by Vale of Mitsui’s interests. Both which is anticipated to result in a better product
want the deal to be completed by the end of 2021. mix and cost reduction, as an outcome of invest-
Vale aims to consolidate NCL’s various sub- ments made in the last three years in an intense
sidiaries ahead of attempts to refinance the drilling campaign aimed at a better knowledge of
Nacala’s outstanding project finance liabilities of resources and reserves.
$2.5bn. The two processing plants will be revitalised
Consolidation of the project finance will in an attempt to raise production to 15mn tonnes
imply that approximately $30mn per year in per year in the second half of 2021 and 18mn tpy
operating expenses at the Moatize mine, associ- in 2022.
ated with the Nacala Corridor tariff and which Over the past 15 years Vale has worked in
currently have an impact on the coal busi- partnership with the Mozambique and Malawi
ness’ EBITDA, will be reclassified as financial governments to develop the Moatize mine and
expenses, debt amortisation, sustaining capital 912-km NLC. The deal is part of Vale’s plans
and others, with an equivalent increase in the to simplify its portfolio of assets and meet the
coal business’ EBITDA. requirements of the Paris Agreement. Vale
Future refinancing of the project finance aims to become a global leader in what it terms
and simplification of the structure will lead low-carbon mining.™

South African coal exports dip 2.8% in 2020

SOUTH AFRICA EXPORTS from South Africa’s Richard’s Bay into what it means for the future,” RBCT chair-
Coal Terminal (RBCT) dipped 2.8% in 2020 to person Nosipho Siwisa-Damasane said.
70.2mn tonnes from 72.2mn tonnes in 2019, as 2020 was also notable as South Africa
coronavirus (COVID-19) disruptions began to exported its first coal to China, delivering
bite. 654,000 tonnes in 2020.
The annual decline was the third in row, “I understand there have been some vessels
down from highs of 73.5mn tonnes in 2018 and that have gone in January to China and it does
76.5mn tonnes in 2017, and took exports back to seem that it is an opportunity for South African
levels last seen in 2013. coal,” RBCT CEO Alan Waller stated.
RBCT said that it aimed to export 77mn Coal exporters that operate through RBCT
tonnes in 2021, with exports to China expected include Anglo Operations, ARM Coal, Exxaro
to drive growth. Coal, Glencore Operations South Africa, jun-
In 2020, 92% of South African coal from ior miners, Kangra Coal, Koornfontein Mines,
RBCT went to Asia, with India and Pakistan Mbokodo, Optimum Coal Terminal, Sasol Min-
being the biggest takers; 5% went to Africa and ing, South African Coal Mine Holdings, South
3% to Europe. Dunes Coal Terminal, South32 Coal Holdings,
“We did get a surprise this year when we Tumelo Coal Mines and Umcebo Mining.
started to see some exports going to China. We’re RBCT received coal from 65 collieries in
looking very positively into that, and looking 2020.™

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