Anglo American completes Serpentina transaction
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2 December 2024 |
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Anglo American completes transaction to add multi-billion tonne Serpentina premium iron ore resource at Minas-Rio |
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Anglo American plc ("Anglo American") announces the completion of the transaction to combine the Serra da Serpentina ("Serpentina") high quality iron ore resource owned by Vale SA ("Vale") into Anglo American's Minas-Rio operation in Brazil, following the agreement announced on 22 February 2024 (the "Transaction"). The premium quality Serpentina iron ore resource is contiguous to, and will be integrated into, Anglo American's Minas-Rio operation in Brazil, in partnership with Vale. Anglo American will continue to control, manage and operate the Minas-Rio operation, including any future expansions that relate to Serpentina.
Under the transaction's terms, Vale is transferring Serpentina and will pay US$157.5 million in cash (subject to completion and commodity price related adjustments(1)) to acquire a 15% shareholding in the enlarged Minas-Rio. Vale also has an option to acquire an additional 15% shareholding in the enlarged Minas-Rio for cash if and when certain events relating to a future expansion of Minas-Rio occur, with value to be determined at the time of option exercise(2).
Duncan Wanblad, Chief Executive of Anglo American, said: "This is a compelling example of industrial logic - putting together the contiguous resources of Minas-Rio and Serpentina to unlock significant value. Integration will generate material synergies through utilisation of Minas-Rio's infrastructure to accelerate the development of Serpentina. It's an outstanding resource with a total orebody strike length more than double that of Minas-Rio with a higher iron ore grade than Minas-Rio's premium grade ore as well as softer, friable ore, which should translate into lower unit costs and capital required for its extraction.
"Integrating Serpentina creates scope to double our production of premium grade pellet feed products for decades to come and so help our steelmaking customers decarbonise their processes. The Minas-Rio DRI-grade product already sells into one of the most attractive growth and premium segments available in our industry today. The optimal development pathway is already being assessed as part of the pre-feasibility work with new options created by the fact that we will now be able to access Vale's rail and port logistics."
Anglo American is also progressing development of the margin-enhancing UHDMS processing technology at Kumba's Sishen mine in South Africa that was announced in August. This will allow Sishen to treble its proportion of premium quality production volume. Together these initiatives will significantly enhance our global premium iron ore business and position it even more strongly for future demand trends - another valuable step as we create a world class copper, premium iron ore and crop nutrients business.
Footnotes:
1 If the average benchmark 62% CIF iron ore price remains above US$100/t or below US$80/t for four years, a purchase price adjustment payment will be made to Anglo American or Vale, respectively, in line with an agreed formula.
2 Relevant events that trigger Vale's right to purchase an addition 15% include the receipt of the requisite environmental licence for an expansion following the completion of a pre-feasibility study and feasibility study at fair value. The pre-feasibility study must be completed within 36 months of the Transaction completing. Providing the pre-feasibility study meets an agreed IRR hurdle rate, a feasibility study must be completed within a further 24 months. If the feasibility study meets an agreed IRR hurdle rate, then the preliminary environmental licence for the expansion of Minas-Rio must be applied for. Should Vale exercise its option to acquire a further 15% of Minas-Rio, the aggregate consideration receivable in respect of both transactions has been capped at 24.99% of Anglo American's market capitalisation as at 21 February 2024. Anglo American will retain the right to remove this cap at its sole discretion subject to any approvals required under the UK Listing Rules.
For further information, please contact:
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Media |
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Investors |
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UK James Wyatt-Tilby james.wyatt-tilby@angloamerican.com Tel: +44 (0)20 7968 8759
Marcelo Esquivel marcelo.esquivel@angloamerican.com Tel: +44 (0)20 7968 8891
Rebecca Meeson-Frizelle rebecca.meeson-frizelle@angloamerican.com Tel: + 44 (0)20 7968 1374
South Africa Nevashnee Naicker nevashnee.naicker@angloamerican.com Tel: +27 (0)11 638 3189
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UK Tyler Broda tyler.broda@angloamerican.com Tel: +44 (0)20 7968 1470
Michelle West-Russell michelle.west-russell@angloamerican.com Tel: +44 (0)20 7968 1494
Asanda Malimba asanda.malimba@angloamerican.com Tel: +44 (0)20 7968 8480
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Notes:
Anglo American is a leading global mining company focused on the responsible production of copper, premium iron ore and crop nutrients - future-enabling products that are essential for decarbonising the global economy, improving living standards, and food security. Our portfolio of world-class operations and outstanding resource endowments offers value-accretive growth potential across all three businesses, positioning us to deliver into structurally attractive major demand growth trends.
Our integrated approach to sustainability and innovation drives our decision-making across the value chain, from how we discover new resources to how we mine, process, move and market our products to our customers - safely, efficiently and responsibly. Our Sustainable Mining Plan commits us to a series of stretching goals over different time horizons to ensure we contribute to a healthy environment, create thriving communities and build trust as a corporate leader. We work together with our business partners and diverse stakeholders to unlock enduring value from precious natural resources for our shareholders, for the benefit of the communities and countries in which we operate, and for society as a whole. Anglo American is re-imagining mining to improve people's lives.
Anglo American is currently implementing a number of major structural changes to unlock the inherent value in its portfolio and thereby accelerate delivery of its strategic priorities of Operational excellence, Portfolio simplification, and Growth. This portfolio transformation will focus Anglo American on its world-class resource asset base in copper, premium iron ore and crop nutrients, once the sale of our steelmaking coal and nickel businesses, the demerger of our PGMs business (Anglo American Platinum), and the separation of our iconic diamond business (De Beers) have been completed.
Group terminology
In this document, references to "Anglo American", the "Anglo American Group", the "Group", "we", "us", and "our" are to refer to either Anglo American plc and its subsidiaries and/or those who work for them generally, or where it is not necessary to refer to a particular entity, entities or persons. The use of those generic terms herein is for convenience only, and is in no way indicative of how the Anglo American Group or any entity within it is structured, managed or controlled. Anglo American subsidiaries, and their management, are responsible for their own day-to-day operations, including but not limited to securing and maintaining all relevant licences and permits, operational adaptation and implementation of Group policies, management, training and any applicable local grievance mechanisms. Anglo American produces group-wide policies and procedures to ensure best uniform practices and standardisation across the Anglo American Group but is not responsible for the day to day implementation of such policies. Such policies and procedures constitute prescribed minimum standards only. Group operating subsidiaries are responsible for adapting those policies and procedures to reflect local conditions where appropriate, and for implementation, oversight and monitoring within their specific businesses.
Disclaimer
This document is for information purposes only and does not constitute, nor is to be construed as, an offer to sell or the recommendation, solicitation, inducement or offer to buy, subscribe for or sell shares in Anglo American or any other securities by Anglo American or any other party. Further, it should not be treated as giving investment, legal, accounting, regulatory, taxation or other advice and has no regard to the specific investment or other objectives, financial situation or particular needs of any recipient.
Forward-looking statements and third party information
This document includes forward-looking statements. All statements other than statements of historical facts included in this document, including, without limitation, those regarding Anglo American's financial position, business, acquisition and divestment strategy, dividend policy, plans and objectives of management for future operations, prospects and projects (including development plans and objectives relating to Anglo American's products, production forecasts and Ore Reserve and Mineral Resource positions) and sustainability performance related (including environmental, social and governance) goals, ambitions, targets, visions, milestones and aspirations, are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding Anglo American's present and future business strategies and the environment in which Anglo American will operate in the future. Important factors that could cause Anglo American's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, unanticipated downturns in business relationships with customers or their purchases from Anglo American, mineral resource exploration and project development capabilities and delivery, recovery rates and other operational capabilities, safety, health or environmental incidents, the effects of global pandemics and outbreaks of infectious diseases, the impact of attacks from third parties on our information systems, natural catastrophes or adverse geological conditions, climate change and extreme weather events, the outcome of litigation or regulatory proceedings, the availability of mining and processing equipment, the ability to obtain key inputs in a timely manner, the ability to produce and transport products profitably, the availability of necessary infrastructure (including transportation) services, the development, efficacy and adoption of new or competing technology, challenges in realising resource estimates or discovering new economic mineralisation, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, liquidity and counterparty risks, the effects of inflation, terrorism, war, conflict, political or civil unrest, uncertainty, tensions and disputes and economic and financial conditions around the world, evolving societal and stakeholder requirements and expectations, shortages of skilled employees, unexpected difficulties relating to acquisitions or divestitures, competitive pressures and the actions of competitors, activities by courts, regulators and governmental authorities such as in relation to permitting or forcing closure of mines and ceasing of operations or maintenance of Anglo American's assets and changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American's most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this document. Anglo American expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers, the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Conduct Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SIX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Anglo American's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Nothing in this document should be interpreted to mean that future earnings per share of Anglo American will necessarily match or exceed its historical published earnings per share. Certain statistical and other information included in this document is sourced from third party sources (including, but not limited to, externally conducted studies and trials). As such it has not been independently verified and presents the views of those third parties, but may not necessarily correspond to the views held by Anglo American and Anglo American expressly disclaims any responsibility for, or liability in respect of, such information.
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