Estrada da Cana, km 11
Bairro Industrial - Uberaba (MG)
CEP 38001-970
Brazil

1980: 1300 MTPD
1983: 1600 MTPD

1998: 1800 MTPD
2003: 2450 MTPD

January 27, 2010 - Vale SA agreed to buy Bunge Ltd.’s fertilizer assets in Brazil for $3.8 billion in cash as the South American nation, the world’s biggest producer of coffee, sugar and orange juice, seeks to cut its dependency on imports.   Vale will acquire 100 percent of Bunge Participacoes e Investimentos SA, which owns phosphate rock mines and assets in Brazil, and Bunge’s 42.3 percent stake in Brazilian fertilizer producer Fertilizantes Fosfatados SA, or Fosfertil, the Rio de Janeiro-based company said today in an e-mailed statement.   Vale, the world’s biggest iron-ore producer and second- largest nickel miner, is seeking to diversify from iron ore and boost investments in fertilizers throughout Latin America as Brazil aims to reach self-sufficiency in crop nutrients after prices surged. The company plans to become a global fertilizer supplier, Chief Financial Officer Fabio Barbosa said Aug. 4.  “Today’s acquisition adds value to Vale’s existing potash and phosphate mine assets, and is a positive diversification,” Gilberto Cardoso, a Rio de Janeiro-based analyst with Banif Securities, said in an interview. “Vale’s strategy is in line with the trend by the world’s big mining companies, including BHP Billiton and Rio Tinto, to invest in fertilizers.”  Vale sid that once the transaction gains approval from regulators, the company will start a mandatory offer to buy out the common shares held by minority shareholders of Fosfertil. Bunge said in a statement that it will use part of the net proceeds of $3.5 billion from the deal to reduce debt.

“This transaction is instrumental to the consolidation of Vale’s strategy on focusing on Brazil as the main market for its production of phosphates, given the potential of the acquired mines,” Vale Chief Executive Officer Roger Agnelli said in today’s statement.  Vale fell 85 cents, or 2 percent, to 41.75 reais as of 1:04 p.m. in Sao Paulo. Bunge, based in White Plains, New York, rose 36 cents to $62.38.  Fosfertil is Brazil’s biggest supplier of phosphate and nitrogen-based products for fertilizers production, currently supplying about 11.3 million tons a year of these materials, according to its Web site. The company, with phosphate rock mines in Goias and Minas Gerais states, has proven and probable reserves of 1.19 billion metric tons of phosphates, Vale said.  Vale is currently Brazil’s sole producer of potash, a raw material used in fertilizer production, at the Taquari-Vassouras mine in Sergipe state, where it produces 800,000 metric tons a year.

Brazil currently imports 91 percent of its potash needs, 49 percent of its phosphates needs and 75 percent of its nitrogen- based fertilizer raw materials, according to the national mining department’s fertilizer minerals coordinator, Joao Cesar de Freitas Pinheiro.  Vale plans to start in 2013 the 4.3 million-tons-a-year Rio Colorado potash mine in Argentina, bought last year from Rio Tinto Group. Other projects may boost the company’s output of potash to 12 million tons a year, Rubens Fernandes, head of Vale’s fertilizers business, said in an Dec. 14 interview. The company also aims to produce 9 million tons of phosphate rock.  Brazil’s potash consumption, now 6 million tons a year, is rising 5 percent a year, about double the world average, he said. Bunge said its share in Fosfertil, together with the other phosphate rock assets it’s selling to Vale, have an annual capacity of about 3 million tons.  Vale is also developing a phosphate rock mine at Bayovar, Peru, which is scheduled to start up this year.   Cash availability for the Bunge purchase is “no problem” for Vale, Banif’s Cardoso said, following its July 2008 share- sale, when it raised more than $12 billion.  “Vale’s got strong investment capability, it’s got a lot of cash reserves,” he said.