Diversified miner Anglo American has completed the transaction to incorporate the Serpentina iron-ore resource into its Minas-Rio operation in Brazil, the company announced on Monday.

The deal, originally disclosed in February, involves integrating Vale’s Serpentina into the existing Minas-Rio operation, a move that is designed to unlock synergies and boost production.

Serpentina is a premium iron-ore resource located adjacent to Minas-Rio, and the integration will see Vale transfer ownership of the resource to Anglo American in exchange for a 15% stake in the enlarged Minas-Rio operation.  

Vale has the option to acquire another 15% interest in Minas-Rio should certain future expansion milestones be met.

As part of the deal, Vale will also pay $157.5-million in cash, subject to adjustments based on commodity prices.

“This is a compelling example of industrial logic – putting together the contiguous resources of Minas-Rio and Serpentina to unlock significant value,” said Anglo CEO Duncan Wanblad in a statement.

“Integration will generate material synergies through utilisation of Minas-Rio’s infrastructure to accelerate the development of Serpentina.”

Serpentina’s total orebody strike length is more than twice that of the Minas-Rio deposit. It also boasts a higher iron-ore grade and softer, friable ore, which should lower both extraction costs and the capital required for mining.

The integration is expected to enable a substantial increase in the production of premium grade pellet feed products, which are essential for steelmaking and critical for meeting the growing demand for decarbonisation in the steel industry.

Wanblad also highlighted that the development of Serpentina, now linked with Minas-Rio’s infrastructure, created the potential to double the production of premium-grade pellet feed products “for decades to come”, helping steelmaking customers to decarbonise their processes.

The Minas-Rio operation already sells its direct reduction-grade product into a rapidly growing and high-value segment of the iron-ore market.

“The optimal development pathway is already being assessed as part of the prefeasibility work with new options created by the fact that we will now be able to access Vale’s rail and port logistics,” he added.

In addition to the Serpentina acquisition, Anglo American is advancing other projects to strengthen its position in the premium iron-ore market. The company is progressing the development of its Ultra High-Density Media Separation processing technology at Kumba’s Sishen mine in South Africa, a project announced in August that aims to triple the proportion of premium quality production at the site.

This transaction marks another step in Anglo American’s strategy to build its portfolio around copper, premium iron-ore, and crop nutrients.