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Vale delays IPO of base metals division, reports 3.2 billion loss

Vale is delaying the timeline of a possible IPO of its base metals division after an expected rebound in nickel prices failed to materialize.

Vale had said in December it was considering selling 30%-40% of the division around August, but CEO Murilo Ferreira now says the new goal is to be ready to present a recommendation to Vale’s board by the end of this year for possible action in 2016.

Vale execs had been expecting nickel prices to rise to ~$21K/metric ton but the company instead sold its nickel for an average $14,279 in Q1, citing a slowdown in Chinese housing construction and bearish sentiment regarding Chinese economic growth.

Vale posted a $3.2 billion loss in the first quarter of 2015, its third straight quarterly loss.

Weak iron-ore prices – the company’s main commodity – and the depreciation of the Brazilian real contributed to the loss.

Vale’s base metals division, which includes nickel and copper production, posted net operating revenues of $1.7 billion in the first quarter, and costs of nearly $1.1 billion.

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