Vale’s proposed acquisition of Ferrous Resources faces objections

Brazilian steelmaker Companhia Siderurgica Nacional (CSN) and port company Porto Sudeste have formally lodged complaints to antitrust regulator Cade against Vale’s proposed acquisition of Ferrous Resources Ltd.

Vale announced an intention to purchase Ferrous from controlling stakeholder Icahn Enterprises LP in a US$550m deal last December. The company is currently under immense public and political pressure following the tailings disaster at Brumadinho in Minas Gerais that likely killed hundreds.

Cade is currently reviewing Vale’s proposal and has confirmed complaints from CSN and Porto Sudeste. According to CSN, Vale already controls around 80% of Brazil’s iron ore market and purchasing Ferrous Resources is likely to further restrict CSN’s access to logistical infrastructure. Porto Sudeste is concerned Vale will use their own infrastructure to move cargo after the acquisition; currently Ferrous uses Porto Sudeste to ship iron ore.

Vale produced 366.5m tons of iron ore and pellets in 2017, while Ferrous produces around 4m tons a year. Vale denied any possibilities of anti-competitive outcomes and imbalance in the Brazilian market.

The following DataLiner graph shows the 10-year iron ore export trends of Vale and CSN: 

In the meantime, Vale signed an agreement with the Vitória city council to resume using Tubarão’s complex upon presenting a contingency plan to mitigate the emission of pollutants at sea. The local council had partially blocked the company from using a waste treatment facility, as well as fining them R$35m for causing pollution.

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