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Vale divestment plan for steelmaker CSP, bauxite miner MRN 'ongoing'

Highlights

CSP, MRN last two candidates for divestment

Vale seeks to unlock more value from base metals

  • Author
  • Diana Kinch
  • Editor
  • Tom Balcerek
  • Commodity
  • Coal Electric Power Energy Transition Metals

Brazilian miner Vale is continuing with the process of divestment of two non-core assets: steelmaker Companhia Siderurgica do Pecem and bauxite miner Mineracao Rio do Norte, a company executive said April 28.

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"We've done a lot to clean up most of the non-core assets out of our portfolio and we just have two candidates left: CSP and MRN," Gustavo Pimenta, executive vice-president of finances, told analysts on a Q1 results webcast.

"Both processes are ongoing," he said. "Those would be the final ones on our (divestment) list today."

CSP is a steel slab producer located in northeast Brazil and discussions are understood to have taken place with various steelmakers interested in buying Vale's stake. The 3 million mt/year capacity company is a joint venture between Vale (50%) and South Korean steel producers Dongkuk (30%) and Posco (20%).

In 2021 it produced 683,200 mt of premium quality steel out of a total production of 2.8 million mt.

S&P Global Commodity Insights Platts estimated steel slab prices at Eur800/mt ($840.50/mt) CFR Northern Europe April 28. Slabs are the feedstock for hot-rolled coil, the price of which remained stable on the day, assessed at Eur1290/mt ex-works Ruhr.

MRN in Para state, north Brazil, is currently classed as the world's third biggest bauxite mine. According to the company's website MRN has recently produced around 14 million mt/year of bauxite from a total capacity of around 18 million mt/year.

Vale owns around 41% of MRN. Other shareholders are Brazilian aluminum producer Companhia Brasileira do Aluminio, and an international consortium involving aluminum producers Hydro, South 32, Rio Tinto and Alcoa.

Vale had previously discussed a sale of its MRN stake to Hydro but no accord was reached.

The company recently exited its nickel asset Vale New Caledonia (VNC), the Mozambique coal mine Moatize and its Midwestern iron and manganese system in Brazil, noted CEO Eduardo Bartolomeo.

Vale is currently exploring avenues to unlock value from its base metals operations and "this is the last reshape that Vale has to do," commented CEO Eduardo Bartolomeo. This may involve setting up a partnership, a spin-off or leaving the operations as they are, he indicated.

The company believes it would be able to more than double its nickel production for the right incentive; it will also be able to produce green nickel for energy transition, said Deshnee Naidoo, executive vice-president, base metals.

The London Metal Exchange official cash nickel price closed at $33,300/mt April 27, up 1.45% on day.