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The chief executive of Vale SA said on Thursday the Brazilian iron ore miner is not looking into a near-term spin-off for its base metal, and the company later said the unit needs to be “transformed” before that longstanding plan can be carried out.
“We are not talking about a spin off yet. The problem here is the size of the business,” said Eduardo Bartolomeo, Vale’s Chief Executive Officer as part of the Financial Times’ Mining Summit.
Vale had a longstanding plan to sell the unit, that was still being considered as recently as April of this year. The plan had first been developed in 2014, postponed to 2015, and then the idea was temporarily abandoned.
Bartolomeo said part of the problem was the value of the business, saying it brings in $3.5 billion in revenue a year, which would put a sale value at “more or less $25 billion.”
To get to a spin-off, Vale said in a statement after the event, “the business still needs to be adjusted, transformed, and go through an internal transformation.”
Vale, one of the world’s largest iron ore miners, is still dealing with the consequences of a dam burst in 2019, which killed 270 in the town of Brumadinho.
Aside from the lives lost, the environmental damage, fines and complicated legal proceedings that targeted its top executives, the incident also depressed the company’s value.
“We are perceived as a risky stock,” Bartolometo said, adding however that “Vale did the homework. Now it’s not a risky company.”
(By Marcelo Rochabrun; Editing by David Gregorio)
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