- Brazilian miner forced to look at core-asset sales amid rout
- Vale is seeking to sell $10 billion in core assets by end 2017
Top iron-ore producer Vale SA is driving forward its aggressive debt-reduction strategy, holding early talks with bankers about selling stakes in some of its best assets, according to people familiar with the matter.
The Rio de Janeiro-based company, seeking to raise about $10 billion through next year to pay down debt, is evaluating the possible sale of a minority stake in its Brazilian copper operations, all or part of its fertilizer business, and putting more precious-metal streams on its mines, said the people, who asked not to be identified because talks are private.
Vale has also floated the idea with bankers about selling a stake in its iron-ore business, although getting a fair deal might prove challenging given current weak prices of the commodity, said the people. Talks are in early stages and the company has yet to decide on a course of action or hire bankers to advise on the asset sales, they said.
A Vale representative declined to comment on the company’s disposal plans. The company’s shares fell 0.2 percent in New York on Thursday when Brazilian markets were closed for a public holiday. The U.S.-listed stock is up 23 percent this year.
In February, Chief Executive Officer Murilo Ferreira opened the door to selling some of the company’s prized assets after Vale reported its first year of losses since its 1997 privatization. The company posted a fourth-quarter net loss of $8.6 billion.
Before that, Vale’s streamlining efforts centered on cost cutting, shifting to higher-quality deposits and selling less-important assets. The company is already trying to raise as much as $5 billion from non-core assets this year, including monetizing its coal joint venture in Mozambique, selling iron-ore ships, energy assets, and a share issuance that it hopes to complete this year, according to a company presentation.
Vale joins other global miners such as Freeport-McMoRan Inc., Glencore Plc and Anglo American Plc who are also trying to pay down debt through asset sales. That’s after slumping commodity prices eroded earnings and pushed up leverage and credit costs.
Widening the asset sale scope to include some of its prized assets comes as Vale’s balance sheet is weakened further by the heavy capital expenditure burden of completing the iron-ore industry’s largest project, called S11D.