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 diana.kinch@dowjones.com