By Letícia Fucuchima
SAO PAULO (Reuters) – Vale announced on Thursday that it has signed, together with its partners Posco Holding Inc. and Dongkuk Steel Mill, a binding agreement with ArcelorMittal for the sale of its interests in Companhia Siderúrgica do Pecém (CSP).
The deal, with an enterprise value of around US$2.2 billion, marks the Brazilian mining company’s exit from the steel sector, in the midst of its strategic plan to divest in operations that are not the company’s main ones, such as iron ore and nickel.
Vale even had stakes in Companhia Siderúrgica do Atlântico (CSA) and California Steel Industries (CSI), the latter of which was sold at the end of last year to Nucor Corporation for US$400 million.
In its quest for portfolio simplification, the miner has also exited the coal business, selling assets in Australia and more recently the Moatize mine in Mozambique.
The business overhaul since 2015 also involved the exit of fertilizer assets in Peru and Brazil, potash projects in Canada and Argentina, palm oil company Biopalma, among other divestments.
Earlier this year, it announced an agreement with J&F Investimentos for the sale of iron ore, manganese and logistics assets in the Midwest.
The next asset in Vale’s portfolio for sale is the bauxite producer Mineração Rio do Norte (MRN), in Pará.
At the same time, Vale has focused on increasing its production of iron ore, copper and nickel, with the aim of positioning itself in the trends of energy transition and decarbonization, which have transformed the mining industry.
In recent months, for example, it has announced agreements to become a leading supplier of low-carbon nickel products, betting on increased demand as the electric vehicle industry grows.
Located in Ceará and founded in 2008, CSP is a joint venture between Vale (50%), Dongkuk (30%) and Posco (20%). With an installed capacity of 3 million tons of steel slabs per year, the steel mill has access to the Port of Pecém.
According to Vale, the value of the transaction will be used to prepay the net debt balance of approximately US$2.3 billion. Completion of the transaction between the companies is subject to customary corporate and regulatory approvals.
(By Letícia Fucuchima; edited by Roberto Samora)