Vale (NYSE: VALE)(B3: VALE3) confirmed it is acquiring a 30% minority interest in Ligga S.A. to increase iron ore production, after the country’s stock exchange questioned why the deal had not been disclosed to investors.
The offtake agreement includes about $190 million in investment and an exclusive offtake arrangement giving Vale the right to purchase 100% of Ligga’s sinter feed production, Vale said in a market notice on Tuesday. The transaction is intended to support an expansion that would quadruply Ligga’s output to 8 million tonnes a year from about 2 million tonnes.
The deal will increase flexibility of Vale’s Northern System portfolio with lower capital intensity and integration into the existing logistics infrastructure, Vale’s executive vice president of finance and investor relations, Marcelo Feriozzi Bacci, said in a notice of market.
Ligga operates the Ferro Sul mine, located in the Carajás region of Pará state in northern Brazil, home to some of the world’s largest iron ore operations. The expansion would give Vale long-term access to additional high-quality ore while using infrastructure already connected to its northern Brazilian operations
Ligga plans to start expanded operations in mid-2028 and will be able to export their production globally, which would have been more challenging before this agreement took place, CNN Brasil reported. Production will now be transported along the Carajás Railroad, about 10 kilometers away from the site to the Ponta da Madeira Maritime Terminal in São Luís, State of Maranhão.
Vale already produces about 330 million tonnes of iron ore anually from its two Brazilian operations. This agreement secures long-term access to additional volumes of high-quality iron ore.
Shares in Vale were down 0.7% to $14.05 apiece on Tuesday morning in New York, valuing the company at $59.7 billion.
B3 asked for clarifications
Vale’s Sept. 22 market notice followed a request from B3, Brazil’s stock exchange, for clarification after InfoMoney reported the transaction a day earlier. The article estimated that the expansion project would receive approximately $97 million in investments, and that Ligga’s iron ore reserves are estimated to be 1.5 billion tonnes.
Vale argued that due to the nature of the transactions, leadership understood it did not constitute a material fact that needed to be announced to investors. It also said it did not identify any atypical fluctuations in the quotation, price or trading volume of its securities that would warrant disclosure under the applicable regulations.
Under Brazilian securities regulator CVM’s Resolution No. 44/21, a material fact can include a corporate decision or financial event related to a company’s business capable of influencing securities’ prices, investor trading decisions, or the exercise of rights tied to those securities.
B3 argued that Vale should’ve disclosed the information before appearing in the media, as it could impact trading decisions and share prices. The exchange also said leaked material information must be disclosed even when the leak cannot be traced to statements by company representatives.
Vale did not confirm Ligga’s mineral reserve volumes, additional expansions and exploration of other types of ore or future production of pellet feed.
The acquisition remains subject to customary corporate and regulatory approvals.
