Brazil's state controlled oil giant Petrobras and iron ore miner Vale are discussing a potential operation involving the miner's nitrogenous assets.

The companies said in separate statements that the talks were ongoing and no binding agreement had yet been reached.

A mining sector analyst who asked not to be identified told Reuters Petrobras could obtain the nitrogenous assets in Parana state from Vale's fertilizer arm Vale Fertilizantes, in exchange for a potassium mine to which Vale is seeking rights.

Petrobras chief executive Jose Sergio Gabrielli told Reuters in July that the company would transfer the rights to the potassium mine, in the northeastern state of Sergipe, to Vale by September.

Petrobras has an interest in the nitrogenous assets as it will be able to produce ammonia, a fertilizer input, from it by combining it with natural gas. The company's natural gas output should surge as it develops new wells off Brazil's coastline.

(Sourced from Reuters)