Brazilian miner Vale has written $2.4 billion off the value of its coal assets in Mozambique over the last year, now valuing its project in the country at $1.73 billion. The operation continues to lose the company half a billion dollars per year, Vale said in its end of year financial results statement released on Thursday.
The Mozambique write-down was the second largest single factor behind Vale’s overall $12.13 billion net loss. The biggest single write-down was $3.46 billion on a nickel mining project in Canada.
The news will draw comparisons with Rio Tinto, which in 2013 wrote $3 billion off the value of its Mozambique coal assets, selling out a year later for $50 million. There have been rumours in Maputo this week that Vale is looking for an exit from Mozambique too, and is willing to sell its entire operation here for $1.5 billion.
The Brazilian company has been struggling to close a deal with Mitsui, agreed in December 2014, under which the Japanese trading house would buy 15% of the Moatize coal mine in Tete for $450 million, valuing it at $3 billion. The deal, which the parties said would close in 2015, also foresaw Mitsui taking half of Vale’s 70% stake in the Nacala Logistics Corridor, for a further $313 million.
A Vale spokeswoman told the media on Tuesday the deal had not yet gone through because of delays in finalising up to $2.7 billion worth of project finance, to refinance part of Vale’s investment in the two projects. However, today’s write-down suggests the deal is unlikely to happen in the form it was originally agreed.