RIO DE JANEIRO--Brazil's antitrust authority Cade, part of the country's Justice Ministry, said Wednesday it approved an accord between mining company Vale (VALE, VALE5.BR) and oil and gas producer Petroleo Brasileiro S/A (PBR, PETR4.BR), or Petrobras, on potash mining in Sergipe state in northeast Brazil.
The accord, which will involve an investment of around $4 billion by Vale in potash production in an area where Petrobras has mineral rights, was approved without restrictions, a Cade representative said.
Vale announced in February that its board of directors had approved a contract to lease from Petrobras for 30 years potash assets and mining rights at Taquari-Vassouras and Carnalita in Sergipe.
Vale already produces around 600,000 metric tons a year of potash at Taquari-Vassouras, currently Brazil's only potash mine, via an arrangement with Petrobras. The accord now approved will allow a continuation of mining at Taquari-Vassouras, and development of the Carnalita mine project, which has potential to produce 1.2 million tons a year of the fertilizer ingredient, as well as the possible development of other reserves in the same region. It is envisaged that Vale could eventually produce up to 2.2 million tons a year of potash in the area.
Vale said the contract with Petrobras is aligned with its growth strategy of becoming one of the leading global players in the fertilizer industry.
Vale recently took its fertilizer unit private, buying out all minority shareholders. Vale Fertilizantes was formed to group together the Brazilian fertilizer assets of Bunge Ltd. (BG), Yara International ASA (YARIY, YAR.OS) and Mosaic Co. (MOS). Vale acquired these assets in 2010 for $5.8 billion.
Vale has said it will invest around $2.1 billion in fertilizers this year, both in Brazil and abroad.
In April, Vale and Petrobras, Brazil's two biggest companies by market capital, signed an accord that foresees the undertaking of various joint projects in areas including fertilizer raw materials and oil and gas.
-Write to Diana Kinch at [email protected]