Vale

Brazilian mining giant Vale is seeking to divest an approximately 15% to 20% stake in its coal operations, as well as projects and mines in Australia and Mozambique to strategic partners, as part of its attempts to cut surging operational costs.

The company is also looking to sell its stake in an ailing Brazilian steel plant, which is majority-owned by German conglomerate ThyssenKrupp AG.

Vale, the world’s largest producer of iron ore, has also lowered its budgetary estimate for 2014, for a third consecutive year.

According to Vale, sale of a stake in its Mozambican rail link and in fertiliser assets can bring funding, cut capital commitment and help mitigate risk.

Vale fertilizer and coal operations Roger Downey told The Wall Street Journal that the company has confidentiality agreements with several interested parties and is targeting users and buyers of coal who can improve the company’s access to the main markets

"What we’re trying to do is to unlock a lot of value we have in this business by bringing in joint-venture partners," Downey added.

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By GlobalData

Meanwhile, Vale expects to invest approximately $2.83bn in its coal business in 2014, mainly to expand the operation at Moatize and to finish building major railway and port infrastructure in Mozambique’s Nacala corridor.

Earlier this week, the company noted that it is seeking to sell about half of Vale’s 70% stake in the Nacala project.

Further, the company is also in talks with Glencore Xtrata for the two companies to integrate their nickel operations in Canada’s Sudbury basin.

Vale’s base metals division head Peter Poppinga said the company expects to have concrete results in the first half of next year and that the value of a potential deal would be "very expressive".

"It’s about, mainly, the mines where one party has the access and the other party has the ore, or vice versa.

"You combine that, and you also combine the surface facilities," Poppinga added.


Image: Moatize coal mine in Mozambique. Photo: Courtesy of Vale.

Energy