Vale may divest Colombian operations: report

BRAZILIAN miner Vale is reportedly seeking to sell off non-core Colombian coal operations with a total capacity of 3 million tonnes annually.
Vale may divest Colombian operations: report Vale may divest Colombian operations: report Vale may divest Colombian operations: report Vale may divest Colombian operations: report Vale may divest Colombian operations: report

Image courtesy of Vale

Donna Schmidt

Unnamed potential buyers told Reuters Friday that Vale is selling the assets because of their small size and high cost versus other larger mines in the region owned by Cerrejon, Drummond and Glencore, and because the assets are not core to its business.

“They're selling – the mine doesn't fit with Vale-type operations,” the source told the news service.

“[T]hey're used to huge, low-cost iron ore mines.”

Vale acquired Colombian assets including the El Hatillo mine, the Cerro Largo deposit, a port concession on the Caribbean and a minority consortium stake in 2009 for $US306 million.

Its operations are in the Cesar province, near the complexes of Glencore and Drummond.

Earlier this year, fellow miner Drummond sold 20% of its operations in the South American country to Japanese firm Itochu for $1.5 billion.

“I'm not surprised at all,” a mining research group expert told Reuters.

“Vale is focusing on met coal and all the developments are focused on Asia ... the property of Vale in Colombia is not geologically speaking in the best condition. It's not bad, but it's not Drummond.”

The source called the company’s coal quality “okay” but said it comes with issues.

“The problem there is that the slope gets deeper as they develop the mine. That means a larger stripping ratio.”

The sources told the news service that Vale has appointed a banker to assist with the transaction, which it commenced work on more than a month ago.

Vale officials told Reuters it does not comment on rumors.

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