Vale SA is considering listing part of its global base metals business as the miner looks to fund capital projects amid a collapse in iron ore prices. It is reported that the world’s top iron ore producer is likely to retain a majority interest in the new entity if it proceeds with the plan.
Vale’s iron ore business contributed 62 percent of the company’s gross revenue in the third quarter. Outside of iron ore, Vale’s global asset portfolio includes nickel assets in Canada, Indonesia and New Caledonia, coal mines in Australia and Mozambique as well as copper projects in Canada, Brazil and Zambia. Prices for iron ore have halved this year to five-year lows below $70 a tonne as mining behemoths Vale, Rio Tinto and BHP Billiton have cranked up output at a time when demand from China, the steelmaking ingredient’s chief customer, has waned.
Other industry insiders, who have worked closely with Vale in the past but are not privy to any announcement, said selling a minority interest would make sense in the current environment and enable the miner to raise cash.