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Vale Officially Pulling Out of Coal Business

Vale Officially Pulling Out of Coal Business

Vale is pulling out of Tete as part of its climate emergency commitment to end coal production. Several announcements last week set out a complex planned withdrawal.

Vale announced on 20 January that to allow the Japanese company Mitsui to leave the project, buying its 15% of the Moatize coal mine and its 50% of the 900 km railway and port facilities Nacala Logistics Corridor, for $1. But it will take on Mitsui’s $2.5 bn debt. The new wholly owned company will only mine high quality coking coal, and hopes to mine 15 mn tonnes this year and 18 million tonnes next year. But the announcement stressed that Vale wants to disinvest from all coal production.

On 22 January Reuters reported that Vale has hired Barclays and Standard Chartered to sell the mine, railway and port, probably to China or India. China produces half the world’s steel and is anxious to replace Australian coal which has been stopped because of a diplomatic confrontation.

India is the second largest global importer of coal and an Indian ICVL company bought the Rio Tinto mine in Benga in 2014, mainly for coking coal. Another Indian company, Jindal, also has a coal mine in Tete.

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To mine coking coal large amounts of cheaper thermal coal must be removed. When these mines opened, the thermal coal could be sold, but now it cannot and will be left in giant piles. Coking coal will have a market for perhaps a decade more.

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