Brazilian iron ore miner Vale and Australian miner Fortescue, both have reduced their debt burdens significantly through disposing less prospective assets. Under such situations, news for tying up with each other seems to be unusual. But analysts observe the move as highly strategic to cope up with the market situation.
Vale, the world's leading producer of iron ore, agreed to enter into a joint venture with power company Cemig to run six hydroelectric power plants. Vale also halved its 9% stake in Norte Energia, which builds a hydroelectric dam in Amazon, Brazil
Vale SA, the world's largest iron-ore producer is considering to sell its holdings in its coal and fertilizer divisions. The Brazilian mining giant is also looking to sell its stake in a steel-slab plant constructed with Germany's ThyssenKrupp AG.
Vale SA had sold the last of its 21.6% ownership in Norsk Hydro ASA following the sale of its non-core assets in order to focus on its more profitable business, which is in iron ore.
On Wednesday, Vale SA said it had planned to sell control of VLI SA to Brookfield Asset Management Inc, Mitsui Co and FGTS valued BRL4 billion.
According to sources, CSN might call off the deal with German steelmaker ThyssenKrupp if the its Alabama plant would not be included in the offer.
Brazil's benchmark Bovespa stock index increased by 2% after investors picked up Vale and OGX.
Vale SA is preparing for the imposition of new royalties charges for mining in Brazil.