Vale (VALE -2.4%) is forming a joint venture with power company Cemig (CIG) to manage some energy assets and to sell part of its stake in the controversial Belo Monte hydroelectric dam in the Amazon forest, part of its efforts to cut costs and focus on its main iron ore mining business.
The JV will comprise Vale and Cemig stakes in six hydroelectric power plants, with a total installed capacity of 1,158 MW.
Vale doesn't disclose the potential value of the assets to be included in the new company, but Cemig says its 45% stake is valued at 2.03B Brazilian reais ($874M).
Cia. Energetica de Minas Gerais (CIG -12.2%) and shares of other Brazilian utilities are under pressure on expectations for Brazil's regulator to curb electricity rate increases Cemig had planned to put in place in April. Shares also were downgraded yesterday at Standpoint Research. Also: ELP -3.7%, CPL -3.4%, EBR -2.4%.
Electrobras (EBR) +22.2% premarket after Brazil's government offers an additional 9.87B reais ($4.7B) to utilities that accept Pres. Rousseff’s plan to renew electricity license with lower rates, on top of 20.04B reais announced Nov. 1. EBR preferred shares lead the Bovespa index, up 28%. ELP +4.1%, CIG +2.6%, CPL +1.2% premarket.
Energy Company of Minas Gerais is engaged in generation, transmission and distribution of electricity. It generates electricity through 64 hydroelectric plants, three thermoelectric plants, and three wind farm.