Mosaic Looks to Brazil's Vale for Latest Fertilizer Acquisition

Researched by Industrial Info Resources (Sugar Land, Texas)--Vale S.A. (NYSE:VALE) (Rio de Janeiro, Brazil) is widely expected to sell about 75% of Vale Fertilizantes, its fertilizer business, to The Mosaic Company (NYSE:MOS) (Plymouth, Minnesota), a leading U.S. fertilizer producer, in the near future, according to Reuters and other news sources. The deal would combine Vale's fertilizer and phosphate assets, and would fit Mosaic's recent trend of buying up other companies' fertilizer businesses, such as those of Archer Daniels Midland Company (NYSE:ADM) (Minneapolis, Minnesota) and CF Industries Holdings Incorporated (NYSE:CF) (Deerfield, Illinois). Industrial Info is tracking $6.5 billion in projects involving Mosaic, and $3.28 billion in projects involving Vale Fertilizantes.

The deal is worth roughly $3 billion, according to Rio de Janeiro-based paper O Globo, while a smaller portion of Vale Fertilizantes that focuses on chemicals production is being negotiated separately for a rumored $1 billion. Depending on the terms of the deal, Vale could receive a 12% to 15% stake in Mosaic.

All of Vale Fertilizantes' active capital projects that are being tracked by Industrial Info are in the planning stages, where plenty of factors, including a sale to Mosaic, could affect their schedules or projected capacities, or whether they are constructed at all. The largest is the $1.5 billion Carnalita Potash Mine and Processing Plant in Japaratuba, Brazil. The underground facility would produce 1.2 million tons per year of potassium chloride, which could be increased in future expansions. For more information, see Industrial Info's project report.

Vale's subsidiary also is weighing two major plans at its Salitre Phosphate Mine and Chemical Complex in Patrocinio, Brazil: the $700 million construction of a rock mine and processing plant, and the $500 million construction of a chemical-processing plant. The 2.5 million-ton-per-year mine and plant would process phosphate rock as feedstock for the chemical plant, which would turn out 600,000 tons per year of phosphoric acid and 1.35 million tons per year of monoammonium phosphate (MAP), triple superphosphate (TSP) and simple superphosphate (SSP). For more information, see Industrial Info's project reports on the mine and chemical complex.

Mosaic also is in the early planning phases on two of its own phosphate-related projects in the U.S., both in Florida: the $1 billion Desoto Phosphate Mine in Arcadia, and the $1 billion Ona Phosphate Mine in Ona. The 6 million-ton-per-year, open-pit Desoto mine is expected to replace the output of two nearby mines that are facing depletion, while the Ona mine, which will have a similar capacity, will replace the output of a single nearby mine. For more information, see Industrial Info's project reports on the Desoto and Ona mines.

For its part, Vale is under way with a four-year ramp-up of its Serra Sul (S11D) iron-ore mine in Canaa Dos Carajas, Brazil, which is part of the reason why shipments of iron ore from Brazil are expected to reach 480 million tons in 2020, up from 371 million tons this year. Industrial Info is keeping tabs on the two major elements of the project: the $6.5 million construction of the open pit mine, mill and concentrator, which is expected to boost output from 140 million to 230 million tons per year, and the $7.9 billion expansion of the railway and terminal port. For more information, see Industrial Info's project reports on the open pit mine and the port expansion.

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