Vale plans $12.8 billion global share sale to fund expansion

04 July 2008

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.