Brazilian Miner Vale Buys Iron Ore Tech Company New Steel

According to the latest reports, Brazilian iron ore mining company, Vale has acquired domestic iron ore processing technology firm New Steel for USD 500 million. The transaction is expected to occur in 2019 but is subject to approval by antitrust authorities in Brazil.

New Steel develops innovative technology to process iron ore. It has developed iron ore beneficiation technologies and owns patents for a beneficiation method called fines dry magnetic separation (FDMS) in 56 countries.

With this acquisition, New Steel's technology will support the development of Vale's high-grade pellet feed initiatives, including the South-eastern System 20 MnT per year pellet feed project which is expected to start operations in 2020 (with 2 MnT per year initial capacity).

Vale is focusing on sales of better quality iron ore as demand for the cleaner and less polluting product rises in China, which is its main market.

The demand for iron ore pellet is expected to increase sharply over the next decade as China's steel manufacturing shifts away from smaller steel mills to production based on large blast furnaces with ultra-low emissions technology. Maintaining environmental standards at such plants will require the use of more direct-charge material such as lump and pellet. Restrictions on iron ore mining in China has severely squeezed supply of pellet feed concentrate since 2015.

Vale had mentioned in an interview last week that there is a 25 MnT global shortage of high-grade pellet feed, which could double in the next three to four years prompting the company to increase export pellet feed concentrate from 2020.

The company has also signed an agreement recently to purchase domestic iron ore exploration company Ferrous Resources from U.S. conglomerate Icahn Enterprises for around USD 550 million. The acquisition will add 4 MnT per year of pellet feed capacity to Vale's portfolio.

The purchase of New Steel and Ferrous Resources is likely to help Vale to further expand in high-grade markets and develop concentrate pellet feed supplies, utilizing advanced processing techniques.