By Paul Kiernan
RIO DE JANEIRO--Brazilian mining firm Vale SA said Thursday it
has pushed back the timeline of a possible initial public offering
of its base-metals division after an expected rebound in nickel
prices failed to materialize.
Vale had said in December that it was considering selling
between 30% and 40% of the division on Toronto's stock exchange
around August. On Thursday, Chief Executive Murilo Ferreira said
his management team's new goal is to be ready to present a
recommendation to Vale's board of directors by the end of this year
so that Vale might have the option of carrying out the transaction
in 2016.
When they hatched the idea for the nickel IPO, Vale executives
were predicting nickel prices would rise to around $21,000 per
metric ton. Thanks to higher prices and production ramp-ups at a
number of new or troubled facilities, they estimated the
base-metals division would generate cash flows of between $4
billion and $6 billion this year.
Instead, Vale sold its nickel for an average $14,279 in the
first quarter, and its base-metals division generated earnings
before interest, taxes, depreciation and amortization of $678
million. The company said prices were hampered by "a slowdown in
Chinese housing construction and bearish sentiment regarding
Chinese economic growth."
Write to Paul Kiernan at paul.kiernan@wsj.com
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