Mumbai: Brazilian mining giant Cia Vale do Rio Doce (Vale) will sell around $12.8 billion in new stock, to finance projects and acquisitions to create the world's largest mining company.
Rio de Janeiro-base Vale, said the new sale of up to 256.9 million common shares and 164.4 million preferred stock will take place by 4 July. The shares, excluding underwriters' over-allotments, are worth 20.5 billion reais ($12.8 billion), based on the previous day's closing price in Sao Paulo.
Vale, said last month it would sell as much as $15 billion in stock to fund expansion and possible takeovers.
Vale, which bought Canadian nickel producer Inco Ltd last year, however, abandoned a $90 billion bid for Xstrata Plc in March and is now aiming to acquire a copper smelter and a phosphate-fertilizer unit from Brazil's Paranapanema SA.
Vale, led by chief executive Roger Agnelli, is already spending $59 billion over five years as it tries to overtake BHP Billiton Ltd as the world's top mining company. It aims to increase annual iron-ore output by 40 per cent to 450 million tonnes by 2012. Vale also plans to double nickel and copper output to about 500,000 tonnes and 592,000 tonnes, respectively.
Vale's share offering, equal to about 8.7 per cent of its market capitalisation, would be the biggest ever by a Brazilian company, according to the country's securities regulator.
Valepar SA, the controlling shareholder of Vale, will maintain its 53.3 per cent stake by buying shares in the sale. Valepar is controlled by Bradespar SA and Previ, the employee pension fund of state-controlled Banco do Brasil SA.
The government and minority shareholders had sold a stake in Vale for 3.34 billion reais in 1997.
Credit Suisse Securities LLC will manage the Vale share sale, in which international investors may opt to receive American depositary receipts, Vale said.
Vale plans to list its ADRs on the Paris-based Euronext exchange. Brazial resident shareholders will get priority in the sale.
Vale, meanwhile, promised to respect its contract prices for iron ore set at the beginning of the year, despite sharp hikes announced by its competitors.
Anglo-Australian mining group Rio Tinto, also the world's largest mining group, on Tuesday effected a 97 per cent hike in iron ore prices it will charge its customers in Asia. BHP Billiton also today reported a equal hike in prices for all its customers in Asia.
''We set the prices in the beginning of 2008 with all our clients. We don't see any reason to change our behaviour,'' said Vale chief executive Roger Agnelli.
Vale had signed an agreement with China's top steelmaker Baosteel to supply iron ore at prices 65 per cent above existing prices in February.
Agnelli, however, noted the market remains ''very strong'' and that he believed it would continue to be ''very strong''.