Brazil Auctions Off Stake in Iron Ore Miner for $3.13 Billion

Brazil on Tuesday auctioned off a controlling stake in Cia. Vale do Rio Doce to a group led by the largest Brazilian steelmaker for $3.13 billion, a milestone in the country’s effort to privatize billions of dollars’ worth of state-controlled companies.

The auction of the iron ore miner, the largest of a state asset in Latin American history, was completed after the government managed to throw out a last-minute injunction granted at the request of its workers. The on-again-off-again auction suddenly resumed late Tuesday and was completed in four minutes.

The winning bidder, Cia. Siderurgica Nacional, was itself sold by the government to private investors in 1992. The CSN-led group purchased 41.73% of CVRD’s voting stock. The sale was financed by U.S. company NationsBank Corp. The mine was sold at a 20% premium to the minimum price of about $2.7 billion.

“We’re pleasantly surprised by the premium that was paid,” Brazilian Planning Minister Antonio Kandir said.

The CSN group bought 104.312 million shares, a controlling stake in CVRD, the world’s largest exporter of iron ore and the largest gold producer in Latin America.

The court injunction was the latest in an avalanche of legal obstacles to the sale erected by opponents who argued that Brazil was selling off a piece of its natural wealth for a pittance. Immediately following the sale, another lawsuit was entered in a Rio de Janeiro court in a bid to annul the auction.

The CSN bid beat out one by a competing group led by Anglo American Corp. of South Africa and SA Industrias Votorantim, the largest industrial group in Brazil.

CVRD was sold after the government managed to overturn more than 25 injunctions that suspended the auction. The legal maneuvering delayed the auction, originally scheduled for last Tuesday.

Last week, hundreds of people demonstrated in a bid to derail the sale of CVRD, a company that spearheaded development of a large swath of the Amazon and put Brazil on the world’s industrialized map.