Rio de Janeiro—Vale SA expects to record a US$1.2 billion after-tax impairment (with no cash effect) on its fertilizer business for the fourth quarter of 2016, the company said in a regulatory filing Feb. 6. The charge arises from the agreement announced in December to sell the bulk of its fertilizer assets to The Mosaic Co. for US$2.5 billion (GM Dec. 23, 2016). Vale expects to report its fourth-quarter and full-year 2016 results on Feb. 23.
Under the agreement with Mosaic, which remains subject to the customary regulatory approvals and the carve-out of the Cubatão-based nitrogen and non-phosphate business from Vale Fertilizantes, the Brazilian mining major expects to receive US$1.25 billion in cash and approximately 42.3 million shares of Mosaic’s common stock. Vale also will have the potential to earn an additional US$260 million, to be paid in cash over a two-year period following the transaction’s close, if certain financial metrics are met. It expects to complete the sale to Mosaic in late 2017. Vale said it will seek buyers for the Cubatão assets this year.