Vale, the world’s biggest iron ore miner, and Fortescue Metals Group have forged an agreement aimed at boosting their competitiveness in the key market of China, and giving the Brazilian company a foothold in the ore-rich Australian Pilbara region.
The miners said on Tuesday that they proposed to form one or more joint ventures for blending and distribution of iron ore in China, a move that would ratchet up competition with Anglo-Australian rivals Rio Tinto and BHP Billiton, the number two and three producers of the steelmaking ingredient.
The agreement, which is the result of year-long negotiations, provides the potential for Brazil-based Vale to buy a minority stake on the market of up to 15 per cent in FMG, the Australian company that is the world’s number four producer of iron ore.