UPDATE 2-Vale to sell control of VLI unit to Mitsui, Brookfield

Wed Sep 18, 2013 4:18pm EDT
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By Jeb Blount and Caroline Stauffer

RIO DE JANEIRO/SAO PAULO, Sept 18 (Reuters) - Brazilian mining company Vale SA said on Wednesday it plans to sell control of its VLI SA general rail- and port-cargo unit to Canadian, Japanese and Brazilian investors in a transaction expected to be worth about 4 billion reais ($1.79 billion).

Under the plan, Tokyo-based trading company Mitsui Co , will pay 1.51 billion reais for 20 percent of VLI and Brazil's FGTS worker compensation and retirement fund will pay 1.2 billion reais for 15.9 percent. Toronto-based Brookfield Asset Management Inc is in exclusive talks to buy about 26 percent of VLI, Vale said in a statement.

The Mitsui and FGTS sales will cut Vale's share in VLI to 64.1 percent, Vale said. The Brookfield stake would cut Vale's share to 38.1 percent, based on Vale figures. Chief Executive Officer Murilo Ferreira told reporters in Brasilia - without giving a price - that the Brookfield stake would be valued similarly to the Mitsui and FGTS shares.

In the face of a weak world economy, falling commodities prices and slowing growth in China, Vale's largest market, Ferreira is moving to slash costs, sell assets and focus spending on the company's core iron ore business.

"Vale will have a minority stake when the three shareholders have their parts," Ferreira said after meeting with President Dilma Rousseff in Brazil's capital. "In the future we could see a public offering so the Brazilian and international public can also be shareholders."

The world's second-largest mining company, Vale is the world's largest producer of iron ore, the main ingredient in steel, and the No. 2 producer of nickel, used to make steel rust-resistant. Vale is also Brazil's largest rail operator and largest private operator of ports.

Under the agreement Brookfield, Mitsui and FGTS will share control of VLI under a shareholder's agreement, Vale said. Mitsui already owns 15 percent of Valepar, which controls Vale through a 53 percent voting stake.   Continued...