UPDATE: Brazil Vale: Prefers Own Fertilizer Assets To Acquisition
July 17 2009 - 7:01PM
Dow Jones News
Brazilian mining mammoth Vale SA (VALE) said Friday that,
because of the superior option of organically growing its own
fertilizer assets, it hasn't made any proposal on acquiring
companies in the sector.
The statement was a reaction to a Brazilian press report earlier
this week that Vale was looking at further acquisitions of
potassium assets.
Citing market sources, the Estado newspaper said Vale was
targeting Mosaic Co. (MOS), which is controlled by Cargill Inc. and
IMC Global Inc. (IGL).
However, Vale's statement wasn't enough to damp speculation over
the company's intentions regarding Mosaic.
Estado said Vale's statement didn't specifically confirm or deny
it was looking at acquiring Mosaic. It just said it was
"frequently" sought out by financial intermediaries to consider
opportunities for acquisitions in the fertilizer sector, Estado
said.
Mosaic is valued at $25 billion, Estado added, and the company
is the world's largest phosphates producer and one of the world's
largest potassium miners.
Earlier this year, Vale paid $857 million for potassium-mining
assets in Argentina and Canada.
In its statement, Vale said the fertilizer projects it is
already developing would make it one of the world's largest
producers of potassium, with output of more than 12 million metric
tons a year.
Vale also has assets under development in Peru, Mozambique and
northeast Brazil.
These assets are likely to render greater returns than those
"offered by possible investment in acquisitions in this industry,"
Vale said.
Vale shares were flat on Brazil's Sao Paulo Stock Exchange on
Friday, closing at 30.08 Brazilian reals ($15.58), where the shares
opened. Shares of Mosaic closed down 0.84% at $49.56.
-By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086;
John.Kolodziejski@dowjones.com