Ex-Xstrata CEO Davis Considering a Bid for Vale Nickel Assets – by Firat Kayakiran, Dinesh Nair and Jesse Riseborough (Bloomberg News – January 13, 2015)


Mick Davis, former Xstrata Plc chief executive officer, is considering a bid for Vale SA (VALE5)’s nickel business, according to people with knowledge of the situation.

Davis’s investment vehicle X2 Resources values Vale’s nickel business at $5 billion to $7 billion, two of the people said, who asked not to be identified because the negotiations are private. There hasn’t been any formal negotiation between X2 and Vale about the assets yet, they said.

X2 has raised about $4.8 billion from equity investors including Asia’s largest raw-materials trader Noble Group Ltd. (NOBL), private-equity fund TPG Capital and sovereign-wealth and pension funds to create a mid-tier mining company. It has been hunting for assets to buy from the world’s largest miners such as Vale, BHP Billiton Ltd. (BHP) and Anglo American Plc.

Vale’s American depositary receipts, the equivalent of one ordinary share, erased losses and rose 1.4 percent to $8.67 at 2:35 p.m. in New York.

Vale, which as well as being the world’s leading iron-ore miner is also the biggest nickel producer, has already said it may try to raise cash from the business.

The company is considering the sale of a minority stake in its metals-producing unit, which it valued at as much as $35 billion, in an initial public offering, Chief Financial Officer Luciano Siani said Dec. 2. The unit includes copper as well as nickel.

X2 Resources declined to comment, while Vale said it hasn’t received any proposal or held talks with X2 about its nickel assets.

Nickel Output

Vale’s nickel output will climb to 303,000 tons this year while copper is forecast to rise to 449,000 tons, the Rio de Janeiro-based company said last month. Its base-metals unit is the company’s largest business after iron ore.

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