TORONTO (miningweekly.com) – Iron-ore producer Vale has drawn down $3-billion from its $5-billion revolving credit facility to increase liquidity and bridge potential cash flow needs until the conclusion of its divestment programme, the company advised on Tuesday.
In particular, the company said it was struggling to conclude the sale of its Mozambique-based coal assets, comprising Moatize and the Nacala logistics corridor.
Vale agreed to sell 15% of its local subsidiary, Vale Mozambique (which owns and operates Moatize) to Mitsui, of Japan. Upon the deal closing, Vale would hold 81% of Vale Mozambique, having originally owned 95% (5% was locally held).
Some of the amount raised would also cover the funds used to amortise bonds due this month.
Vale also stated that it was also working on long-term debt transactions to reduce the use of the revolving credit lines while the divestment programme was carried out. These transactions were expected to preserve Vale's average cost of debt, the company said.
The Nacala corridor project, located in northern Mozambique and southern Malawi, was being implemented to provide logistical support for the Moatize coal project, in Mozambique.
The project involved the construction and rehabilitation of the 912 km railway through Mozambique and Malawi, and the construction of a new coal terminal in Nacala-a-Velha port.
The total construction cost was estimated at $4.4-billion, with part of the cost to be funded with project finance from public financial institutions overseas and Japanese banks.
Edited by: Samantha Herbst
Creamer Media Deputy Editor
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