Mosaic in talks to acquire Vale fertilizer unit in $3bn deal — report

US-based Mosaic Co. (NYSE:MOS), the world’s largest producer of phosphate fertilizer, is said to be in talks with Vale (NYSE:VALE) to acquire the Brazilian mining giant’s fertilizer unit, in a deal worth about $3 billion.

According to sources quoted by Reuters, a cash-and-stock deal remains the favourite option at this point, though the parties are also discussing other alternatives.

Vale is the biggest producer of phosphate in Brazil, which in turn is the planet's fifth-biggest user of fertilizer.

The largest producer of iron ore and nickel, Vale had long vowed to hold on to world-class operations in these and other key areas.

But in February, the Rio de Janeiro-based firm announced it was putting its core assets on the block in a bid to reduce its net debt to $15 billion within 18 months, from $25.23 billion at the end of 2015.

Talks with Mosaic come on the heels of Vale’s failed attempt to partner with US private equity firm to bid for Anglo American's (LON:AAL) niobium and phosphates business in Brazil, which were acquired by China Molybdenum in April.

Recovering lost ground

Vale is the biggest producer of phosphate in Brazil, which in turn is the planet's fifth-biggest user of fertilizer. It currently operates two potash mines, one in Brazil and one in Peru, and has developing projects in Canada and Mozambique.

Mosaic in talks to acquire Vale fertilizer unit in $3bn deal — report

According to a recent report by BMI Research, Brazil is set to recover its long-lost appeal to mining investors and see a fresh wave of mergers and acquisitions this year.

The experts predict the windfall will benefit several sectors, beyond iron ore and potash, giving a renewed boost to the country’s gold industry. Higher gold prices will push miners to restart or speed up development of projects in Brazil, they say.