Fortescue Metals Group Ltd has announced the signing of a non-binding Memorandum of Understanding (MOU) with Vale S.A which sets out the principles on which the two parties will pursue long-term opportunities to create additional value for customers in the Chinese steel industry and enhance the competitiveness of their operations.
Fortescue said the agreement proposes the formation of one or more Joint Ventures for the blending of selected volumes of iron ore from both companies.
According to the giant miner, this new blended product will be developed to suit the long-term need of its customers and improve the efficiency of the supply chain to the steel industry.
Fortescue Chief Executive Officer, New Power, said the agreement also provides a framework for potential investment by Vale in Fortescue through a minority acquisition of shares on the market and/or investment in current or future mining assets.
“The Memorandum of understanding will allow us to work together to deliver long-term value to our customers, through the efficient supply of an attractive and competitive new iron blend in China,” Mr Power said.
The MOU is subject to agreement on the final terms of any resulting transaction documents and any other required approvals, including Board approval of each of the two parties and relevant regulatory approvals.