Vale SA, the world’s largest nickel producer, is considering selling about 25 percent to 30 percent of its base metals business in an initial public offering.
Work on the transaction continues, although the Rio de Janeiro-based miner will only proceed if nickel and copper prices reach “appropriate” levels, Investor Relations Director Rogerio Nogueira said in Sao Paulo Wednesday.
“We have the vision of doing this IPO to create value,” he said. “It was never thought as a way of getting cash.”
Vale, whose iron-ore business has been buffeted by a 50 percent price collapse since late 2013, may hold the base metals offering in two tranches as it seeks to unlock value at a time of rising profit and output after years of operational setbacks. Vale hired Canadian law firm Stikeman Elliott LLP for the possible IPO, people with knowledge of the matter said earlier this month.
While Nogueira declined to give a valuation for the base metals business during his presentation, Chief Financial Officer Luciano Siani said in a Bloomberg Television interview in December that it may be worth $30 billion to $35 billion.
At the time, Vale projected base metals earnings before interest, taxes, depreciation and amortization, or Ebitda, of $4 billion to $6 billion this year from $2.5 billion in 2014.
Ebitda is now forecast at $3.1 billion to $4.6 billion.
Nogueira said Wednesday that the dimmer view stems from lower-than-expected prices so far this year, although a recovery in nickel prices is expected by year-end and in 2016. Copper and nickel are down 8.8 percent and 16 percent, respectively, in 2015.
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