Bloomberg News

Vale Gets 7.3 Billion-Real Loan From Brazilian Bank

April 01, 2008

Cia. Vale do Rio Doce will get a credit line of as much as 7.3 billion reais ($4.17 billion) from Brazil's BNDES state development bank to help fund its push to become the world's biggest mining company.

The loan, the biggest ever offered by the government-owned BNDES to a single company, will help pay for mining and logistics projects through 2012, Rio de Janeiro-based Vale and BNDES said today in a statement. Vale can tap the credit line within five years and repay the loan within 10 years.

Vale is spending $59 billion over five years to expand globally to overtake BHP Billiton Ltd. as the world's top metals and mineral producer. The financing from BNDES, which has a place on Vale's board, will be used exclusively to expand output in Brazil, the company said.

``We are working at capacity limits and our clients are counting on this production increase,'' Chief Executive Officer Roger Agnelli said today at a press conference. ``This is part of Vale's strategic plan.''

Vale agreed to pay interest equal to the London interbank offered rate on 80 percent of the loan and Brazil's long-term interest rate on the remainder, Agnelli said.

The mining company is also in talks with Japanese and Chinese banks to finance its expansion projects, Agnelli said. Vale is negotiating with Bank of China Ltd. (3988), Export-Import Bank of China, Citic Group, China Development Bank, Japan Bank for International Cooperation and China's Bank of Communications, Agnelli said.

Agnelli last week said talks to buy Xstrata Plc for an estimated $90 billion collapsed because of demands by the target company's biggest shareholder.

Vale shares rose for a seventh day, gaining 1.11 reais, or 2.2 percent, to 51.90 reais in Sao Paulo trading.

To contact the reporters on this story: Diana Kinch in Rio de Janeiro dkinch1@bloomberg.net' Romina Nicaretta in Sao Paulo at rnicaretta@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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