Vale SA (NYSE : VALE) has inked a deal to acquire Mitsui & Co’s stake in the Moatize metallurgical and thermal coal mine and port project in Mozambique, as the Brazilian miner works to exit the fossil fuel and become carbon neutral by 2050.
The company is buying the 15% interest in the venture held by Japanese trading company Mitsui for a token fee ($1), as well as Mitsui’s interests in the Nacala Logistics Corridor (NLC) — the railroad connecting the mine to a nearby port.
Vale’s plan is to consolidate both assets ahead of a future sale that will allow it to kiss coal goodbye.
The transaction is expected to help Mitsui complete its exit from the project this year, after which Vale will begin searching for a “third party” interested in the assets.
Moatize is Vale’s largest venture in the coal sector, and has been operational since 2011. The complex has a capacity of 22 million tonnes of coal a year, including metallurgical and thermal types.
In 2017, Mitsui paid $690 million for its interest in the mine and for a 50% stake in the NLC project.
Vale is likely to target companies in India and China, including state-backed metals trader China Minmetals Corp as well as India’s JSW Steel Ltd and state-owned Steel Authority of India.
China produces and consumes about half of the world’s coal and is planning to allow more provinces to start building coal power plants starting in 2023.
India is the world’s second-largest coal importer after China.
Vale’s move is part of a growing shift away from coal among the world’s biggest mining companies. The fossil fuel is being gradually phased out of the global energy mix as investors increasingly demand environmental commitments from corporate leadership.
The Rio de Janeiro based miner is targeting a 15% reduction in Scope 3 emissions by 2035 through the use of carbon offsets, eco-friendly shipping and partnering with its customers on low-carbon steelmaking technology.