Mosaic in talks to buy Vale fertilizer unit in $3bn deal

Mosaic in talks to buy Vale fertilizer unit in $3bn deal

Mosaic Co (NYSE:MOS), the world’s largest generator of phosphate fertilizer is in negotiations with Vale (NYSE:VALE) to acquire the Brazilian mining firm’s giant fertilizer unit, in a US$3 billion deal.

The two companies are discussing a cash-and-stock deal but are also looking at other alternatives.

Vale, the largest producer of iron ore and nickel announced in February it was putting its core assets up for sale in order to reduce its net debt to $15 million from $25.23 million within 18 months at the end of last year.

Vale is currently the largest producer of phosphate in Brazil and the world’s fifth-largest user of fertilizer. Demand is anticipated to increase twice as fast as global demand until 2025.

The Brazilian mining giant currently operates two potash mines, one in Brazil and one in Peru and is working on projects in Mozambique and Canada. Mosaic purchased distribution assets from Archer Daniels Midland Co (NYSE:ADM) in Brazil and Paraguay last year.

Vale is hoping to meet a $10 billion debt-reduction target by 2017.