Agreement with Vale

Japanese company Mitsui on Tuesday announced it has reached an agreement with Brazilian mining company Vale on the details of its exit from the coal mining joint venture in Mozambique. Both companies have reached an agreement on detailed terms and conditions in line with the principle of understanding, announced in January, the statement said. Mitsui and Vale have signed a definitive agreement on the transfer of interests, from the Japanese company to the Brazilian mining giant, which in turn will sell the entire coal extraction and export project to a new entity. The transaction between Mitsui and Vale is expected to be completed in the course of 2021, following the fulfilment of preliminary conditions, including approvals from the relevant regulatory authorities.

Mitsui will liquidate the two companies it owns in Mozambique to provide loans for the Moatize coal mine and the outflow railway line for export at the port of Nacala, respectively. The settlement will be made after the transfer of loans held by both companies to Vale, and respective closing of accounts. “No significant impact is expected on the financial statements related to this issue,”

Mitsui said. The transaction with Japan’s Mitsui is made for the symbolic price of one dollar, but all associated expenses and charges – including an outstanding balance of $2.5 billion (about €2 billion) – pass to Vale.

Vale announced in January that following the acquisition of Mitsui’s stakes and, consequently, following the simplification of the business and asset management, it will begin the process of divestment of its stake in the coal business, which will be guided by the preservation of the operational continuity of the Moatize mine and the northern logistics corridor [railway line], through the search for a third party interested in these assets. Vale employs around 8,000 people, close to 3,000 direct workers and the remainder sub-contracted, and coal is currently one of Mozambique’s main export products, mainly to Asia. Before selling the entire enterprise, Vale is making investments which it hopes will help it resume production, reaching 15 million tonnes of coal in 2021 – after 5.1 million tonnes in 2020. Over 10 years of operations in Mozambique, only in two (2017 and 2018) has the company made a profit in the country.