February 11, 2010 / 11:51 AM / in 8 years

UPDATE 3-Vale to buy key Mosaic fertilizer assets in Brazil

* Mosaic to sell its stakes in Fosfertil and Fertifos

* Also plans to sell Cubatao operations to Vale

* Total deal value expected to be more than $1 billion (Recasts, adds details. In U.S. dollars)

By Euan Rocha

TORONTO, Feb 11 (Reuters) - Brazilian mining giant Vale VALE5.SA obtained an option on Thursday to acquire the bulk of Mosaic’s MOS.N fertilizer interests in Brazil, a move that will further expand its asset base in the sector.

In a deal that could to rake in more than $1 billion for Mosaic when completed, the U.S. fertilizer maker has given Vale an option to buy its Cubatao operations, along with its stakes in Brazilian companies Fosfertil and Fertifos.

Vale has already moved to expand its fertilizer operations in a big way. Last month, it said it would pay $3.8 billion to buy some of Bunge Ltd’s BG.N fertilizer assets in Brazil, including Bunge’s stakes in both Fosfertil and Fertifos. [ID:nN15127215]

Norway’s Yara International YAR.OL, the world’s largest nitrogen fertilizer producer, also agreed last month to sell its stake in Fertifos, along with other phosphate assets to Vale. [ID:nWEB7305]

Fertifos, with a 56.2 percent stake, is the controlling shareholder in Fosfertil. Fertifos itself is co-owned by Bunge, Yara, Fertipar, Heringer and Mosaic.

Bunge and Mosaic also own direct stakes in Fosfertil FFTL4.SA, which is Brazil’s largest supplier of fertilizer raw materials. Fosfertil, which owns mines and processing plants, is currently building a phosphate rock mining complex and a new chemical complex in Brazil.

Once Vale closes its deals with Bunge, Yara and Mosaic it will become the controlling stakeholder in both Fosfertil and its parent Fertifos.

This deal is the latest sign of the growing importance of the global fertilizer business, which has seen a spate of merger and acquisition activity in recent months. [ID:nLDE60R1SH]

Vale has stated its interest in strategic acquisitions in the fertilizer sector. It acquired Rio Tinto’s RIO.AX RIO.L potash assets in 2009 and the company was also rumored to be in talks to acquire all of Mosaic last year. [ID:nN16206903]

Mosaic said the proposed deal is subject to Vale closing its deal with Bunge. The sale of the Cubatao operations would likely follow the sale of Mosaic’s stakes in Fosfertil and Fertifos.

Mosaic’s Cubatao facility in Brazil produces SSP, a phosphate-based fertilizer. It also acts as a fertilizer blending and bagging facility, and an animal feed production center.

Mosaic, which is majority owned by agricultural conglomerate Cargill [CARG.UL], said the proposed transaction will not affect its fertilizer blending and distribution business in Brazil.

Shares of Mosaic were up 1.1 percent at $58.04 on the New York Stock Exchange, while shares of Vale dipped 1.4 percent to 41.63 reais in morning trading in Brazil. (Reporting by Euan Rocha; Additional reporting by Adveith Nair in Bangalore; Editing by Peter Galloway)

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