Feb 10 (Reuters) – Vale’s chief executive said on Tuesday that a possible initial public offer of part of its nickel division was off the cards for now due to low prices for the commodity, but that other asset sales could be expected over the coming year.
The Brazilian miner is under pressure to resolve a cash-flow squeeze this year as it wrestles to fund mega-projects in the midst of a price slump in its core product: iron ore. But Chief Executive Murilo Ferreira said that the option of spinning off part of its base metals division, which had been outlined in December, was no longer attractive.
“We’re not going to sell it on the cheap … You can forget that possibility,” Ferreira said in an interview at the Rio de Janeiro offices of the world’s largest iron ore producer.
He added that a sale of the entire division was not being considered, and dismissed reports that former Xstrata CEO Mick Davis might be looking to buy it through his startup, X2. “It has been at least two years since I have seen our friend Mick Davis,” he said.
Cash will be raised through other means and Ferreira said the market could expect an announcement of some form of divestment in March and another in the second half of the year. He did not elaborate.
Despite lower iron ore prices, Ferreira said he did not expect any writedowns on Vale’s assets. “This is not something you can just do by watching the price on your screen.”
Some relief may also come from a slight rebound in prices. Ferreira said he expected iron ore .IO62-CNI=SI to trade between $70 and $79 per tonne in the second quarter and to remain there for most of the year.
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