Vale board head sees no rush for acquisitions

June 21, 2008

June 21th (Reuters) – Brazil’s mining giant Vale (VALE5.SA: Quote, Profile, Research)(RIO.N: Quote, Profile, Research) has no need for urgent acquisitions to better compete with rivals, chairman of Vale’s board, Sergio Rosa, said on Friday.

Sergio Rosa, who also is chief of pension fund Previ, a key Vale shareholder, told reporters the world’s biggest iron ore producer and none of the three top diversified miners had a bigger projects portfolio than rivals like BHP Billiton (BHP.AX: Quote, Profile, Research)(BLT.L: Quote, Profile, Research) and Rio Tinto (RIO.L: Quote, Profile, Research).

 

Vale has an ambitious five-year investment plan worth about $60 billion aimed at capacity expansion in iron ore and other metals like nickel and copper.

 

Rosa likened these projects to a new “$60 billion company that will come on stream in the next five years” at Vale.

 

“Starting up new projects brings much higher returns. You’d pay a lot more for a mature company,” Rosa said. He did not rule out Vale seizing an acquisition opportunity at some stage “but without any rush to seek acquisitions like others have.”

 

BHP has been trying to take over Rio Tinto for months.

 

Vale on Thursday denied a newspaper report that said it was lining up banks to build a credit line for an acquisition and reiterated it was not in merger talks.

 

O Estado de S. Paulo reported earlier this month that Anglo American, U.S.-based Freeport-McMoRan Copper and Gold Inc (FCX.N: Quote, Profile, Research) and U.S. aluminum giant Alcoa Inc (AA.N: Quote, Profile, Research) were potential targets for Vale’s acquisition hopes.

 

Anglo’s market value is almost $85 billion, Alcoa’s is nearly $32 billion and Freeport is worth around $44 billion, according to Reuters company data.

Vale has been branching out aggressively into other metals in recent years to diversify its revenue base. In 2006, it paid $18 billion for Canadian nickel producer Inco.

 

Earlier this year, it tried and failed to buy Xstrata in a deal that some analysts valued as high as $90 billion.

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