By Paul Kiernan 

RIO DE JANEIRO--Brazilian miner Vale SA is considering selling shares in its base-metals division in an effort to "unlock" value, Chief Executive Murilo Ferreira said Tuesday, after a drop in iron-ore prices this year sent its stock spiraling downward.

Specific details of the transaction have yet to be firmed up, as the sale hasn't been proposed to Vale's board and would hinge on a "fair price," Mr. Ferreira said in an annual presentation to investors. Tentatively, the company would look to sell between 30% and 40% of its base-metals business in an initial public offering on the Toronto stock exchange around August.

News of the possible IPO came as Vale slashed its investment budget for a fourth consecutive year amid an uncertain outlook for commodities such as iron ore, of which it is the world's biggest producer. Vale plans to invest $10.17 billion next year, down from a revised estimate of $12 billion in 2014.

Slowing economic growth in China and surging iron-ore production from Vale's rivals in Australia have sent the benchmark price for the steelmaking material to $70 per metric ton in recent days. That is little more than one-third of the 2011 peak of around $190.

Since iron ore accounts for three-fourths of Vale's revenue, the decline in prices has hammered its earnings. The company's shares in Sao Paulo have fallen 42% year-to-date. Last month, Vale replaced its long-serving director of ferrous minerals, Jose Carlos Martins.

Analysts say Vale could have to choose between reducing its dividends and taking on new debt to finish major projects.

Whether the company has to make that choice will likely depend on how much cash it is able to raise by selling off assets. Including the base-metals IPO, a desired joint-venture in its coal business and other transactions, Chief Financial Officer Luciano Siani said Vale could potentially raise $5 billion to $10 billion.

"The intention is still to be paying a healthy dividend over '15." Mr. Siani said. "We hope that '15 will be very active in terms of managing our portfolio."

Mr. Siani said this year was "muted" for deals. Vale had hoped to sell around half of its 70% stake in the Nacala Logistics Corridor--a multibillion-dollar railway and port project designed to carry coal out of Mozambique--by midyear, but has yet to announce a deal.

Vale also failed to round up buyers for some nickel operations in Canada, according to two people familiar with the matter. Last year, Vale tried to get a partner to buy into the sprawling operation at Thompson, Manitoba, which includes two mills and a refinery, and this turned into an attempt to sell assets, one of the people said.

Mr. Siani said the Thompson complex isn't for sale.

Some of the world's largest miners have been trying to sell off mines as they look to trim debt and, sometimes, narrow their focus. But many have struggled to do so, as other miners steer clear of acquisitions while banks and investors prove unwilling to finance transactions.

Vale executives are hoping investors will see more value in the company's base-metals division, which primarily includes copper and nickel mines in Brazil, Canada, Indonesia and New Caledonia. Earnings before interest, taxes, depreciation and amortization, or Ebitda, in the segment stood at $1.94 billion in the first three quarters of this year, compared with $1.64 billion in all of 2013.

Vale expects base-metals' Ebitda in 2015 to reach between $4 billion and $6 billion thanks to better prices for nickel and ramp-ups of at its copper operations.

"There are not many pure-play companies in base metals available, so the eventual floating of the base-metals assets of Vale could attract, in our view, a lot of investor interest," Mr. Siani said.

Alistair MacDonald and Ben Dummett contributed to this article.

Write to Paul Kiernan at paul.kiernan@wsj.com

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