CIC leads Vale talks to se­cure iron ore sup­plies

Chi­nese con­sor­tium ne­go­ti­at­ing buy­ing por­tion of fu­ture pro­duc­tion for as long as 30 years

China Daily (USA) - - BUSINESS - By BLOOMBERG

China In­vest­ment Corp, the $814 bil­lion sov­er­eign fund, is lead­ing an in­vestor group in talks for a multi­bil­lion-dol­lar iron ore sup­ply deal with in­debted Brazil­ian miner Vale SA, peo­ple fa­mil­iar with the mat­ter said.

The Chi­nese con­sor­tium is ne­go­ti­at­ing the po­ten­tial pur­chase of a por­tion of Vale’s fu­ture iron ore out­put for as long as 30 years, two of the peo­ple said, ask­ing not to be iden­ti­fied as the in­for­ma­tion is pri­vate.

Vale could fetch about $9 bil­lion in up­front cash from the sale, one per­son said. No agree­ments have been reached, and the talks may not re­sult in a trans­ac­tion.

Some Chi­nese com­pa­nies and Ja­panese trad­ing houses have also held dis­cus­sions with the Rio de Janeiro-based com­pany about pos­si­ble deals, in­clud­ing ac­quir­ing a mi­nor­ity stake in Brazil­ian iron-ore as­sets owned by Vale, the peo­ple said.

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. Chief Ex­ec­u­tive Of­fi­cer Murilo Fer­reira raised the prospect of sell­ing some of the com­pany’s most prized as­sets in Fe­bru­ary, after the miner

the amount of money Vale SA could fetch in up­front cash from the sale

re­ported its first year of losses since 1997.

The world’s top iron-ore pro­ducer has ex­ited coal mines in Aus­tralia and is in talks with US fer­til­izer pro­ducer Mo­saic Co to sell its South Amer­i­can po­tash and phos­phate as­sets, which may fetch about $3 bil­lion, peo­ple fa­mil­iar with the mat­ter said. Vale said it wants to raise about $10 bil­lion through next year.

CIC is also part of a group along­side Brook­field As­set Management Inc and Sin­ga­pore sov­er­eign wealth fund GIC Pte that is close to buy­ing a stake in a Brazil­ian nat­u­ral gas pipe­line net­work from state oil com­pany Petro­bras for nearly $6 bil­lion, peo­ple fa­mil­iar with the mat­ter said in June.

Vale’s Sa­marco min­ing joint ven­ture with BHP Bil­li­ton Ltd, whose op­er­a­tions were halted last year after a dam spill, is seek­ing a stand­still agree­ment on about $1.6 bil­lion in bank loans as its own­ers refuse to cover debt pay­ments un­til min­ing re­sumes, peo­ple with knowl­edge of the mat­ter said this month.

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