SAO PAULO Brazilian miner Vale (VALE5.SA)(VALE.N) said on Monday it agreed to sell its thermal coal assets in Colombia for $407 million (259.9 million pounds) to a unit of Colombian Natural Resources, a mining company controlled by U.S. investment bank Goldman Sachs (GS.N).
Vale, the world's second-biggest miner, is shifting its focus away from thermal coal mining to concentrate on its operations in coking coal, a type of coal used by steel mills,
Under the agreement, Vale, will sell 100 percent of its coal mines El Hatillo and Cerro Largo in the department of Cesar, and its port terminal Sociedad Portuaria Rio Córdoba on the Caribbean coast.
Vale will also sell its 8.43 percent stake in the Ferrocarriles Del Norte de Colombia, which operates the railway between the mines and the terminal. Completion of the sale is dependent on regulatory approval from the Colombian government.
Goldman Sach's Colombian Natural Resources already owns a stake in the railway and mines in the same region.
Rio de Janeiro-based Vale bought the assets in 2008 for about $306 million.
Vale is selling the mines because thermal coal, used to generate electricity, is not part of the company's "core business," Roger Downey, head of Vale's coal operations, said last week.
But Vale, the world's largest iron-ore miner, is keeping coal mines that produce coking coal, he said.
On February 14, Reuters reported that Goldman Sach's Colombian Natural Resources was the most-likely winner in a bidding process for the mines.
Vale's Colombian coal mines are smaller and less efficient than those operated by major coal producers such as Drummond DRMND.UL, Glencore (GLEN.L) and Colombian Natural Resources. Drummond and Glencore were also considering bids for Vale's mines, sources told Reuters in February.
Production at Vale's mines rose 19.4 percent to 3.57 million tonnes last year while output at Colombian Natural Resources increased 58 percent to 2.39 million tonnes.
(Additional reporting by Alberto Alerigi in Sao Paulo, Eduardo Garcia, Helen Murphy and Jack Kimball in Bogota and Jeb Blount in Rio de Janeiro; Writing by Jeb Blount; Editing by Maureen Bavdek and Ed Davies)