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Vale fertilizer deal on track despite BNDES delay -sources

| RIO DE JANEIRO

RIO DE JANEIRO Oct 5 Vale SA's plan to dispose of fertilizer assets remains on track despite a request last week by Brazil's state development bank, BNDES, to analyze the transaction more carefully, according to two people with direct knowledge of the situation.

Terms of the deal, which involves the sale of certain assets to U.S.-based Mosaic Co, are unlikely to change significantly, one of the sources said on Wednesday, requesting anonymity to speak freely about the issue.

BNDES pushed back the vote on the fertilizer deal at a Vale board meeting last Thursday, the first person familiar with the situation said. O Globo columnist Lauro Jardim, without saying how the newspaper obtained the information, reported that day that BNDES had delayed the voting on the transaction to Oct. 20.

One of the people said Mosaic could pay about $3.6 billion for some of Vale's fertilizer assets. The sale of other unspecified operations within Vale's fertilizer unit is being negotiated with Norway's Yara International ASA, the first person said, without elaborating.

Both Vale and BNDES, which are based in Rio de Janeiro, declined to comment, as did Mosaic. Yara said it did not comment on market speculation.

Vale, the world's largest iron ore producer, is disposing of assets to help meet a $10 billion debt-reduction target by next year. The strategy was devised by Chief Executive Officer Murilo Ferreira to help insulate the mining company against declining iron ore and nickel prices, after losing a record $12.1 billion last year.

Reuters first reported on June 17 that Mosaic was eyeing Vale's fertilizer assets.

The transaction underscores how Brazil, the world's fifth-largest fertilizer consumer, remains a key growth spot for fertilizer and phosphate producers. Vale estimates that demand for the products in Latin America's largest economy is expected to grow twice as fast as global demand over the next decade.

Vale has fertilizer assets in Canada, Brazil, Peru, Argentina and Mozambique. Mosaic bought distribution assets from Archer Daniels Midland Co in Brazil and Paraguay last year. (Additional reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Peter Cooney)

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