Vale, the world’s largest iron ore mining company, announced today Tuesday that it plans to acquire as much as 25 percent, worth USD 965 million, in its erstwhile Australian rival Fortescue Metals Group as both companies seek to carve out more market share in China. The agreement between Vale and Fortescue comes as iron ore prices are on a recovery path covering.
Discussions have been ongoing for 12 months and as both companies struggle with debt, the announcement seems timely. Analysts, however don’t the upward trend for iron ore prices will last. Citigroup predicts iron ore prices declining to USD 40 a ton by year-end. Goldman predicts is USD 35 sometime in Q4.
Source: The New York Times, March 8 2016