Vale to sell Colombian coal operations to private company

Brazilian mining giant Vale said May 28 that it has signed an agreement to sell its thermal coal operations in Colombia to CPC S.A.S., an affiliate of Colombian Natural Resources S.A.S. (CNR), a privately-held company, for US$407m in cash, subject to regulatory approvals.

The thermal coal operations in Colombia are made up of a fully-integrated mine-railway-port system consisting of: 100% of the El Hatillo coal mine and the Cerro Largo coal deposit, both located in the Cesar department; 100% of Sociedad Portuaria Rio Cordoba (SPRC), a coal port facility in the Atlantic coast of Colombia; and an 8.43% equity participation in the Ferrocarriles del Norte de Colombia S.A. (FENOCO) railway, which owns the concession and operation of the railway connecting the coal mines to SPRC.

Colombia, a rapidly-growing coal producer, is a heavy exporter of coal into the U.S. Gulf and Atlantic coast markets.

“The sale of the thermal coal operations in Colombia is part of our continuous efforts to optimize the asset portfolio,” Vale noted. “Vale’s growth and sustainable value creation strategy encompasses a multilane road, in which active portfolio asset management is a very important tool to optimize capital allocation and focus management attention.”

Vale is the second biggest mining company in the world and the largest private company in Latin America. Headquartered in Brazil and operating in 38 countries, Vale is the global leader in iron ore production and the second biggest nickel producer. It also produces copper, coal, manganese, ferroalloys, fertilizers, cobalt and platinum group metals.

The Vale website said that the company

has coal exploration and production activities in Australia, China, Colombia and Mozambique. It didn’t mention the U.S., where last year a subsidiary, Vale Exploration USA, was seeking a federal coal exploration permit for two coal parcels in eastern Oklahoma. The website noted that most of El Hatillo’s coal production is exported to the U.S. and Europe.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.