Vale Speeds Up Australia Coal Exit With Second Sale in Month

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  • Brazilian miner sells Integra to Bloomfield Group, Glencore
  • Follows mine sale last month of venture for just a dollar

Vale SA is exiting its money-losing thermal coal business in Australia, selling a second project in less than a month, as prices for the power-generation commodity dive.

The Brazilian miner agreed to sell its Integra coal mine complex to Australia’s Bloomfield Group and Glencore Plc, the buyers said in a statement Tuesday. No financial details were announced. Vale, which had put the project in care and maintenance last year after finding it economically inviable, declined to comment on the details of the transaction, saying it is focusing on top assets.

“There is a strategic shift,” Vale said Wednesday in an e-mailed statement, adding that the company is concentrating on “world class assets with high reserves volume and lower cost potential.”

The divestment follows the sale last month of the Isaac Plains coking and thermal coal mine, a venture between Vale and Japan’s Sumitomo Corp., to Stanmore Coal Ltd. for just a dollar after the project was valued at A$860 million ($610 million) three years ago.

The Rio de Janeiro-based company still produces metallurgical coal, which is used in steel production, at Carborough Downs in Australia. With the shutdown of Integra and Isaac Plains, now about two-thirds of Vale’s coal production comes from the company’s flagship Moatize project in Mozambique.

Vale sold its thermal coal at an average of $54.55 per metric ton in the second quarter, 20 percent less than a year ago and far from the more than $100 per ton the company used to fetch two years ago. The producer’s coal unit has been posting negative earnings before interest, taxes, depreciation and amortization, or adjusted ebitda, since 2010.

“The outlook for coal is still very difficult,” Roger Downey, Vale’s executive director for fertilizers and coal, said July 30 after the Isaac Plains sale announcement. “We see even in Australia mines that are still in the red and at some point that has to change. We have quite adverse and challenging markets.”