Iron Miner Vale Says Crown-Jewel Deal Unlikely This Year

  • Expects to complete coal and fertilizer sales this year
  • Vale is battling to bring down $27 billion in net debt

Vale SA, the top iron-ore miner, is poised to complete coal and fertilizer sales this year, while a deal involving its most prized assets probably will take longer, according to its investor-relations chief.

The Rio de Janeiro-based company, which is grappling to reduce one of the industry’s biggest debt loads, is looking to wrap up a protracted negotiation to sell coal assets in Mozambique. It’s also nearing an accord to sell its fertilizer business, Andre Figueiredo said Thursday at an event in Sao Paulo.

Those two transactions should be completed in 2016, most likely in the fourth quarter, Figueiredo said. While a sale involving a so-called core asset may also happen this year, it would be unlikely, he said. This month, people familiar with the matter said China Investment Corp. was leading a Chinese investor group in talks for a multibillion-dollar iron-ore streaming deal with Vale.

“This will be a sale of future production in some way,” Figueiredo said, referring to the potential core-asset deal, without providing further details.

His guidance on timing may be interpreted as less optimistic than that of Chief Executive Officer Murilo Ferreira, who predicted in July that two transactions other than the coal deal would close by the third quarter and another by yearend. Days later, Vale announced a deal to sell more of its gold reserves to Silver Wheaton Corp. for $800 million payment.

Vale has joined global miners Freeport-McMoRan Inc., Glencore Plc and Anglo American Plc in selling assets after its net debt swelled to about $27 billion as a commodity rout eroded earnings. Ferreira raised the prospect of selling some of the company’s most prized assets in February, after the miner reported its first year of losses since 1997.

“Vale’s ability to execute on this plan will shape how it looks in the future,” Bloomberg Intelligence analysts Kenneth Hoffman and Sean Gilmartin wrote in a research note last week.

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