Vale sells fertilizer business to Mosaic for US$2.5bn

Brazilian mining giant Vale has agreed to sell its fertilizer unit, Vale Fertilizantes, to Mosaic in a US$2.5bn cash-and-stock deal.

Mosaic will pay Vale US$1.25bn in cash and 42.3mn shares, corresponding to an 11% stake in the Minnesota-based company.

The deal involves Vale's phosphate assets in Brazil except the ones in Cubatão, its share of Bayóvar in Peru, its potash assets in Brazil, including the Carnalita project, and the Kronau potash project in Canada.

Inclusion of Argentina's Río Colorado potash project in the transaction is subject to Mosaic's agreement following appropriate diligence, Vale said in a release on Monday.

"Vale's assets located in Cubatão, which are mostly dedicated to nitrogen nutrients and accounted for an adjusted Ebitda of US$108mn in 2015, will be carved out from Vale Fertilizantes prior to the completion of the transaction with Mosaic," the statement said. "Vale expects to explore the sale of Cubatão assets during 2017."

Proceeds of the deal, which Vale expects to conclude next year, will be used to reduce the company's debt.

Vale Fertilizantes was formed when Vale acquired Fosfertil and the nutrient assets of Bunge in 2010. Vale Fertilizantes also has assets in Mozambique.

Mosaic acquired Archer Daniels Midland's South American fertilizer business in December 2014, including five blending facilities in Brazil and Paraguay.