Brazil's Companhia Vale do Rio Doce (CVRD), the world's second-largest mining company, is drawing up proposals for a $30bn (£15.4bn, E22.7bn) London float that would be one of the most high-profile listings of 2007.
It aims to create a subsidiary, CVRD Base Metals, by bringing together the recently acquired Canadian nickel firm Inco with its existing copper, nickel and aluminium businesses.
It aims to float around 20 percent of the company, raising about $5bn, to help offset the cost of acquiring Inco.
CVRD's business is built on its near-monopoly of Brazil's vast iron ore reserves, the largest in the world, but it has begun diversifying into new metals.
The company bought Inco for $17.4bn in June after a bidding battle with American copper firm Phelps Dodge.
A listing would further cement London's dominance of financing in the industry
Over the past 10 years, Rio Tinto has been joined by BHP Billiton, Anglo American, Xstrata, and a host of Russian and Kazakh miners.
Bankers close to CVRD said part of the motivation for a float was to establish a valuation for Inco independently of the company.
Deficiencies in CVRD's shareholder rights, such as its different classes of shares, means it trades on lower multiples to its assets than some of its peers.
Banks have not been appointed to advise on a float. CVRD used Credit Suisse, UBS and ABN Amro on the Inco acquisition.
A banker at one of these said the Toronto Stock Exchange might try to win the CVRD Base Metals listing mandate from London.
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