Posts Tagged ‘Tres Valles’

Vale Offers $1.13 Billion for Metorex

April 11, 2011 Comments off

“Brazilian iron-ore giant Vale SA said Friday it will acquire control of South Africa-based copper and cobalt miner Metorex Ltd. for nearly $1.13 billion. The deal will help Vale inch closer to its aim of becoming one of the world’s biggest copper producers, with a long-term production target of one million metric tons a year of the metal.

Vale, which will pay for the acquisition in cash, said the operation still must be approved by Metorex’s shareholders and regulatory bodies in South Africa, Zambia and the Democratic Republic of Congo. As well as being listed on the Johannesburg Stock Exchange, Metorex has a secondary listing on the Frankfurt Stock Exchange and American depositary receipts traded over-the-counter in the U.S. Following the planned acquisition of the entirety of Metorex’s share capital, the company will be delisted, Vale said.”

Source: Wall Street Journal, April 8 2011


  • Shareprice of Metorex has doubled since September 2010, driven by high copper price, weakening South African currency. The price jumped from R5.50 to R7.50 in the past 3 weeks.
  • The current 26 thousand ton (long term production target of a million tons of copper per year) adds to Vale’s 208 thousand ton sold in 2010. Other copper expansion projects of the company are the Chilean Tres Valles project and Salobo copper mine in Brazil. These 2 projects together should add approx. 120 thousand tons.


  • The stronger diversification into base metals and other geographies is an important means for Vale to become less dependent on iron ore prices. Vale’s 208 thousand tons of copper production compared to 678 thousand tons for Rio Tinto, 913 thousand tons for Xstrata. It is a good sign that the company is trying to grow by carefully selecting bolt-on acquisitions with high growth potential.
  • Next to buying a set of assets and projects with high growth potential located close to the Konkola North project it operates with African Rainbow Minerals, the company gains access to an enormous amount of expertise on doing mining business in Sub Saharan Africa with the Metorex management. Congo clearly is a high-risk business environment, and plunging in greenfield without an experienced management team would greatly reduce the change of success.

©2011 | Wilfred Visser |

An acquisition in aluminium: Vale of the trolls

May 10, 2010 Comments off

“A deal with Norway marks a change of course for a Brazilian mining giant … For Vale, ridding itself of its aluminium business, its third-biggest source of revenue after iron ore and coal, marks a significant change of course. Its purchase of Inco, a Canadian nickel miner, in 2006 and its failed attempts in 2008 to take over Xstrata, another big competitor, indicated that Vale’s strategy was to become a diversified global mining giant like Rio Tinto and BHP Billiton. But now, as Jordi Dominguez, an analyst at HSBC, puts it, the Brazilian company is ‘de-diversifying’.”

Source: The Economist, May 6 2010


  • Vale has done a significant investment in the iron ore business and in the same week as sold its aluminium business.
  • HSBC and the Economist interpret these transactions as a significant change of course for the company. Where the company has been trying to diversify in the previous years, the Economist suggests Vale will focus more on the iron ore business.
  • The reason Vale has given for their ‘portfolio restructuring’ is the uncertainty of cheap energy supply in Brasil, which is crucial for a sustainable profitability of the aluminium business.


  • One of the key messages of Vale’s latest investor presentation was that it would invest more in fertilizer nutrients. One of the major projects coming on steam is the Tres Valles copper project. These signs cannot really be explained as “de-diversification”.
  • HSBC and the Economist are likely to have drawn their conclusions too rapidly. Vale has reduced the risk in an important part of its business in a sound deal, at the same time reducing its dependency from the Brazilian government.