Fortescue sign Vale investment agreement

Fortescue sign Vale investment agreement

Fortescue Metals (ASX:FMG) have signed an agreement to enter joint ventures and other investment deals with the world’s biggest iron ore producer Vale (NYSE:VALE) aimed at serving the Chinese market.

Fortescue shares leapt almost 24 per cent to A$3.08 yesterday as iron ore prices surged by a record 19 per cent overnight on the prospect of more Chinese stimulus.

The Australian miner released a further announcement stating the MOU provides a framework for potential investment by Vale in Fortescue between 5 and 15 per cent of its listed shares.

“The MOU will allow us to work together to deliver long-term value to our customers, through the efficient supply of an attractive and competitive new iron ore blend in China,” Fortescue CEO Nev Power said.

If Brazil’s Vale do take up the option to buy 15 per cent of Fortescue it could be worth almost US$1 billion based on Tuesday’s close.

@RGNonline