Japan's Mitsui has announced its intention to exit its coal mining operations in Mozambique, according to Motonnews.
In March 2017, mitsui from Brazil mining giant Vale (Vale) acquired tamsui river millet a 15% stake in the company, the subsidiary with mozambique Moatize tete province west open-pit coal mine a stake of 95%, and Vale, another subsidiary 50% stake in the subsidiary operates from Moatize to mozambique's northern coast DE - a - Velha mining port 912 kilometers of railway.
Mitsui had been working on the Moatize and Nacala projects since 2017, but "Vale decided to divest its coal business to focus on its core business," according to a press release issued by Mitsui on Thursday.
In response, Mitsui decided to sell its stake to Vale in the context of portfolio restructuring and restructuring.
It added that "Vale will continue to operate these projects following the acquisition of Mitsui's interest and will eventually consider spinning off its interest to a third party".
The company announced on Wednesday that Mitsui and Vale "have entered into a Heads of Agreement (HOA) setting out the principal conditions for the transfer of Mitsui's entire interest in the project and related loans to Vale at a price of $1 per share".
Mitsui said a definitive agreement to transfer the equity stake and related loans would be signed "once detailed terms and conditions have been agreed between the parties concerned and both Mitsui and Vale have obtained the necessary internal approvals".
The transfer is expected to close "no later than 2021, subject to the satisfaction of relevant conditions, including the receipt of the necessary consents and approvals."
Mitsui added that it was "currently assessing the anticipated loss that may result from the transfer".
According to Reuters, Mitsui has posted a series of impairment losses totalling 46.7 billion yen ($451 million) on its Mozambique coal and infrastructure assets, leaving the book value of its stake in the Moatize coal mine at zero.
Including loans, the Nacala logistics project still has a book value of $500 million.
A statement issued by Vale made clear that the acquisition of Mitsui was the first step in divesting its coal business as part of its efforts to become carbon neutral by 2050.
Vale said the divestiture "will be guided by maintaining the operational continuity of the Moatize mine and Nacala logistics projects through the search for third parties interested in these assets".
