CVRD Acquires FERTECO

4/27/2001

CVRD Acquires FERTECO

Rio de Janeiro, April 27, 2001 – Companhia Vale do Rio Doce (CVRD), the world´s largest producer and exporter of iron ore, announces the acquisition of 100% of Ferteco Mineração S.A.(Ferteco) from ThyssenKrupp Stahl AG (TKS), one of the leading European steelmaking groups, for US$ 566 million.


Business description


Ferteco is a Brazilian company engaged in the mining and processing of iron ore based in the state of Rio de Janeiro and wholly owned by TKS. It is Brazil´s third largest producer of iron ore, with a production capacity of 15 million tonnes per year. It has mineable reserves of 263 million tonnes of hematite and itabirite ores, with a quality similar to the CVRD Southern System reserves. It operates two open pit iron ore mines, Fábrica and Feijão, and a 4.0 million tonnes per year pellet plant in the Iron Quadrangle region in the state of Minas Gerais.


From 1996 to 2000, Ferteco´s sales volume grew by 18.1% per year, reaching 24.9 million tonnes last year. Ferteco´s main market has been Europe and TKS is its largest customer, with 6 million tonnes of fines and pellets in 2000. In parallel with this transaction, CVRD and TKS negotiated a long term iron ore supply agreement, that will allow the sale of larger volumes of Brazilian iron ore.


Logistics


Ferteco owns 10.5% of the total capital of MRS Logística S.A. (MRS), a Brazilian railroad company. MRS has 1,612 kilometers of tracks, linking the states of Rio de Janeiro, São Paulo and Minas Gerais, with a capacity of 80 million tonnes. Ferteco operates a marine terminal through its wholly owned subsidiary, Companhia Portuária Baía de Sepetiba S.A. (CPBS), in the port of Sepetiba, Rio de Janeiro.


Ferteco is also a traditional customer of CVRD transportation services, having shipped last year 10 million tonnes of iron ore and pellets through the Vitória a Minas railroad and the Port of Tubarão.


Financials


Ferteco´s consolidated net revenues in 2000 reached US$ 417.0 million, generating an EBITDA of US$ 92.0 million and net earnings of US$ 39.8 million. As of December 31, 2000, Ferteco had a net debt of US$ 131.3 million.


Synergies


There are strong synergies to be explored. Its main sources are related to transportation services and the rationalization of mining. The exploration of such synergies will translate into lower costs, a larger supply of diversified and high quality products, and the extension of the useful life of an important global supplier of iron ore due to the availability of the huge CVRD reserves.


The acquisition of Ferteco helps to support CVRD´s commercial strategy of developing true partnership relations with its customers. Together with its capacity to supply large volumes of iron ore, CVRD is able to provide specific solutions and tailor-made products to each client thus allowing them to obtain substantial productivity gains.

Therefore, thanks to its reliability and the development of a diversified portfolio of high quality products, CVRD global leadership in the iron ore market is highly beneficial to the steel industry.

JP Morgan Chase acted as exclusive financial advisor to CVRD in this transaction.

 

Ever since the Covid-19 outbreak began, our highest priority is the health and safety of our employees. Our IR team adopted work-from-home, and as we continue to face these new circumstances, we strongly recommend you prioritize e-mail and online engagement.

For further information, please contact:

Vale.RI@vale.com
Ivan Fadel: ivan.fadel@vale.com
Andre Werner: andre.werner@vale.com
Mariana Rocha: mariana.rocha@vale.com
Samir Bassil: samir.bassil@vale.com

This press release may include statements that present Vale’s expectations about future events or results. All statements, when based upon expectations about the future, involve various risks and uncertainties. Vale cannot guarantee that such statements will prove correct. These risks and uncertainties include factors related to the following: (a) the countries where we operate, especially Brazil and Canada; (b) the global economy; (c) the capital markets; (d) the mining and metals prices and their dependence on global industrial production, which is cyclical by nature; and (e) global competition in the markets in which Vale operates. To obtain further information on factors that may lead to results different from those forecast by Vale, please consult the reports Vale files with the U.S. Securities and Exchange Commission (SEC), the Brazilian Comissão de Valores Mobiliários (CVM) and in particular the factors discussed under “Forward-Looking Statements” and “Risk Factors” in Vale’s annual report on Form 20-F.

​​


CVRD Acquires FERTECO