The new boss at Vale has scrapped controversial plans by his predecessor to sell shares in its fertilizer business, saying the Brazilian mining group will instead pay R$2.2bn ($1.4bn) buy out minorities in the business.

Vale said it would pay investors in Vale Fertilizantes R$25.00 per share for the 15.7% of the company which it does not already own, representing a premium of 32% over the closing price of the shares on Wednesday.

The move represents one of the first by Murilo Ferreira since he last month succeeded Roger Agnelli as Vale chief executive, in a reshuffle seen as orchestrated by the Brazilian government, a major shareholder in the group.

Guido Mantega, Brazil's finance minister, has urged Vale to focus on areas that benefit Brazil, such as job creation and value-added operations such as steel, rather than basic commodity operations, calls which have provoked criticism that shareholders' interests are being disregarded.

In fertilizer, many saw the hand of government in a series of purchases by Vale last year of Brazilian assets from foreign giants such as Bunge and Mosaic, at a time when the country's expansion in agriculture has heightened its requirement for nutrients.

'Capture synergies' 

While Vale had, under Mr Agnelli, said that it would sell 49% of Vale Fertilizantes by the end of the year, the group said that, following an investigation into options, it would now take the business private.

"Vale is not considering an eventual listing of a subsidiary holding in its fertilizer assets," the group said.

"The proposal… is aligned with Vale's strategy to maximise shareholder value by consolidating the fertilizer assets in order to capture the existing synergies within Vale's asset portfolio."

Vale has, besides its domestic fertilizer operations, phosphate mines in other South American countries, such as Argentina and Peru, and Canadian potash assets.