By Rogerio Jelmayer
SAO PAULO--Brazilian mining company Vale SA (VALE), the world's
top producer of iron ore, has agreed to form a joint venture with a
unit of power company Cemig (CIG, CMIG4.BR) for the management of
certain energy assets as part of the mining company's efforts to
cut costs and focus on its main business.
Vale will create a company called Aliança Geração de Energia S/A
jointly with Cemig Geracao e Transmissao S.A., a unit Cemig, with
Vale assuming a 55% stake in the new company and Cemig controlling
the remainder.
"The transaction is consistent with Vale's strategy of
maximizing value for shareholders, in that it reduces capital
expenditure requirements on investments related to non-core assets
and increases flexibility for managing these assets in the future,"
Vale said.
In recent months, Vale executives highlighted the company's
plans to reinforce its focus on its core businesses of iron ore,
nickel, copper, coal and fertilizers. The firm is aiming to raise
cash for major investments in those areas in the coming years.
The joint venture will be comprised of Vale's and Cemig's stakes
in six hydroelectric power plants, with a total installed capacity
of 1,158 megawatts.
Vale did not disclose the potential financial amount of the
assets to be included in the new company. But Cemig, in a separate
statement, said its participation in the joint venture is valued at
2.03 billion Brazilian reais ($874 million).
In a separate deal, Cemig acquired nearly half of the 9% stake
that Vale holds in a company called Norte Energia S.A., which is
implementing and then will operate the Belo Monte hydroelectric
plant, for 206 million reais.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com
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