Vale acquires Bunge’s Brazilian fertilizer assets for $3.8 billion

The world's largest iron ore miner, Vale SA of Brazil agreed yesterday to buy US agribusiness giant Bunge Limited's fertilizer nutrients assets in Brazil, including its interest in Fertilizantes Fosfatados SA (Fosfertil), for $3.8 billion in an all-cash deal.

Vale will acquire 100-per cent stake in Bunge Participacoes e Investimentos SA (BPI), which holds Bunge's phosphate mines, processing plants, and also its 42.3 per cent interest in Fosfertil.

Under the terms, $1.65 billion will be paid for the phosphate mines and plants and the remaining $2.15 billion for the shares held by Bunge in Forfertil.

Bunge's retail fertilizer business is not included in the deal, for which Bunge will execute a supply agreement with Vale through 2012, with an option to extend it for one more year.

Vale CEO Roger Agnelli said, ''This operation is of fundamental importance for the consolidation of Vale's strategy to focus on Brazil as the major market for its production of phosphate, in view of the potential local mines, as well as the growth associated with the projects abroad.

BPI is Brazil's second largest producer of fertilizers with around 14.2 per cent market share. It wholly-owns two rock phosphate mines producing 1.6 million tonnes of phosphate rock with proven and probable reserves of around 339 million tonnes of high grade phosphate rock.