Vale (NYSE: VALE) is selling its Moatize coal mine and the Nacala logistic corridor, a multi-billion dollar port and rail project in Mozambique, to Vulcan Minerals (TSX-V: VUL) in a transaction valued at $270 million.
The Brazilian mining giant said it will receive $80 million immediately and the rest at the close of the deal. There will also be a 10-year royalty contract, it added.
“This is another accomplishment on our commitment to reshape our company, focusing on our core businesses,” CEO Eduardo Bartolomeo said in the statement.
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 company has set as goal to be carbon neutral by 2050. To reach that target, it plans a 15% reduction by 2035 in so-called scope 3 emissions, those generated when customers burn or process their raw materials. The sale of Moatize is one step towards meeting that goal, it has said.
The Nacala Logistics Corridor connects the Moatize mine in Mozambique’s north-west Tete province via a 900km rail line to the deep-water port of Nacala in the east, passing through Malawi on the way.
The mine, which started production in 2011, has been a source of ongoing problems and losses for Vale.
The company fully impaired Moatize in 2019, after taking a $2.4 billion charge on the operation in 2016.
The Moatize mine is expected to reach an annual production rate of 18 million tonnes in 2022. The complex has a capacity of 22 million tonnes of coal a year, including metallurgical and thermal types.