Vale Mulls More Asset Sales as It Seeks to Boost Profit

Vale SA is considering more asset sales this year following $2.7 billion of divestments since early 2012 as it seeks to cut costs and boost profit.

The iron-ore producer based in Rio de Janeiro is studying whether to sell its stake in Oslo-based aluminum producer Norsk Hydro ASA, as well as oil and gas assets, Chief Executive Officer Murilo Ferreira said today. The company is also pondering the sale of its 40 percent stake in Brazilian bauxite producer Mineracao do Rio Norte SA, he said.

“We also have a surprise that I won’t mention so you remain curious,” Ferreira told reporters in Belo Horizonte, Brazil, after a speech at the Brazilian Mining Congress.

Vale is selling assets, putting projects on hold and focusing on its more profitable iron-ore business in a bid to recover profit margins after commodities prices fell. The company last week sold stakes in a cargo unit for about 2.7 billion reais ($1.2 billion) to Japan’s Mitsui & Co. and a Brazilian government fund after $1.47 billion of asset sales last year, including a coal mine in Colombia and 10 large vessels.

Vale lost 1.5 percent to 32.27 reais at the close in Sao Paulo today, the lowest level for its shares since Sept. 6.

The expansion of shale-gas production in the U.S. is creating an opportunity for Vale to sell pellets, a processed form of iron ore, to American steelmakers, Ferreira said in a presentation at the mining event. The company is in “intensive” discussions to supply pellets to U.S. steel mills and its Tubarao VIII project will benefit from rising demand in the country, he said.

Before it's here, it's on the Bloomberg Terminal.