Brazil miner Vale SA (VALE) is likely to benefit from Rio Tinto PLC's (RTP) joint venture with BHP Billiton Ltd.(BHP), UBS Pactual said in a report released Monday.

Last week Rio Tinto walked away from a deal with Aluminum Corp. of China Ltd. (601600.SH) and agreed to an equity issue and iron-ore joint venture with BHP.

"We reiterate our buy, as we view Vale's iron ore business as strategically well-positioned over the long run," UBS said.

"We see this as positive for Vale as it highlights the strategic value of consolidated iron ore operations, and iron ore pricing support over the long run," the UBS report said.

However, UBS also said the main risk might be the strengthening of independent iron ore producers.

UBS said it did not expect Vale and BHP-Rio to compete against each other for market share.

Instead, UBS said, "They should focus their efforts in taking market share from Chinese domestic ore production, and replacing Indian ore that is increasingly staying at home as steel production grows."

The bank also said it believed the three major miners would likely buy up smaller producers if they offer dedicated demand for iron ore though long-term contracts.

UBS also said it expected Vale to continue its efforts to increase its interest in coal and copper through mergers and acquisitions.

-By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086; John.Kolodziejski@dowjones.com