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By Stephen Eisenhammer and Guillermo Parra-Bernal
RIO DE JANEIRO/NEW YORK, March 25 (Reuters) - Brazil's Vale SA may find it easier to dispose of giant ships and part of its stake in a rail logistics business before selling mining assets, as the world's top iron ore producer looks to raise cash amid a price rout, according to four sources with knowledge of the situation.
Struggling with a slump in iron ore prices, Vale presented a list to investors in December of nine possible options to raise cash. Of the options, only a coal joint venture with Japanese trading house Mitsui & Co Ltd has been announced so far.
A number of the other eight options seem increasingly challenging as the risk associated with both Brazil and mining-related investments continue to mount, said three of the sources, who sought anonymity to speak freely about the matter.
At this point, selling a group of giant ore carriers known as Valemaxes, and disposing of a part, or all, of a 43.8 percent stake in rail freight firm MRS Logística SA seem the best options for Vale, those sources said. Vale declined to comment.
"The infrastructure and logistics play could help Vale unlock value more quickly than the mining assets, which markets are not pricing fairly," the first source said, adding that "the cash impact of the former options is not great, creating a dilemma for the company."
Vale needs cash to continue investing in a giant iron ore project in the Amazon, as prices for the steel making ingredient .IO62-CNI=SI touch the lowest level since the spot market began in 2008 amid slowing Chinese demand and additional supply from Australia.
The company's new 90 million-tonne-per-year mine, known as S11D, is vital for winning back market share from Australian rivals. Chief Executive Officer Murilo Ferreira pledged the project is "untouchable" and will not be delayed to save cash.
Vale has to fill a $1.4 billion cash flow shortage this year, according to estimates by André Pinheiro, an analyst at Itaú BBA.
A fifth source said Vale was pursuing multiple options at the same time to see which gains most traction in the market.
An issuance of redeemable, non-voting shares on specific assets seems a good option, although it could potentially dilute some of Vale's controlling shareholders, another source said.
One alternative that investors found exciting was a planned initial public offering of Vale's base metals division. Yet Ferreira recently told Reuters the IPO was not an option unless the nickel price improved.
At the time, Ferreira also said investors could expect one of the nine options to be secured and announced in March. But a New York-based banker said deals were taking longer to close as buyers push the advantage of a bearish market.
Fertilizers are another area in which Vale is struggling to find buyers, although in recent months competitors have been able to land fresh investment, such as Fertilizantes Heringer SA , which sold a 9.5 percent stake to Potash Corporation of Saskatchewan Inc for $56 million.
"Fertilizers could be a wild card ... the problem is the value of the assets and whether Vale would want to grow or exit the business," the third source said.
Vale has a phosphate mine in the state of Minas Gerais as well as a potash project in the state of Sergipe, among other fertilizer assets.
Selling or finding new partners in other mining assets such as a stake in its Indonesia unit would also be tricky with low commodity prices meaning the value Vale could get would unlikely please shareholders.
Any Valemax sale would probably take a similar form to last year's deal with Chinese state-owned shipping firm China Ocean Shipping Co, known as COSCO. Under terms of that deal, Vale sold four ships and leased them back on a long-term basis.
With the Valemaxes, "you can kill two birds with one stone by freeing up cash and guaranteeing low cost freight rates for years," the first source said.
With the mega ships now able to dock at Chinese ports after a two-year ban, further deals seem likely, the sources said.
According to the second source, the most likely deals are also the most painful.
"In this market you can only sell what you don't want to sell... for anything else you won't find a buyer," the source said. (Editing by Marguerita Choy)