Vale in $550 million deal to buy iron ore miner Ferrous Resources

Vale SA, the world’s top nickel producer, will acquire fellow Brazilian miner Ferrous Resources in a US$550 million deal that was confirmed by the latter firm’s controlling shareholder Icahn Enterprises LP.

Iron ore-focused Ferrous will merge into a company controlled by Vale, according to a securities filing published by Icahn. Ferrous owns five mineral assets in the iron quadrangle of Minas Gerais and one operation in Bahia state.

Icahn’s chairman Carl C. Icahn said: “As committed, long-term investors, we stood by Ferrous and invested additional capital in the form of both debt and equity, moved forward with critical growth capex projects and did all of this at a time when others were fleeing the sector.

“By investing additional capital and leading the company with a strong and effective board of directors, we were able to stabilise and improve Ferrous’ situation, which laid the groundwork for this transaction.”

Meanwhile, Vale’s CEO Fabio Schvartsman had previously stated that the company was looking for small high-return acquisitions with synergies with its current assets.

Schvartsman also announced earlier this week that Vale had decided to keep full ownership of its New Caledonia nickel mine in the South Pacific and invest $500 million in it after previously vowing to find a partner for the venture.