Vale chief executive Murilo Ferreira told Financial Times that the company is looking to sell around 40% of the unit, which is valued at $35bn.
"We believe that there is hidden value in the base metals division that needs to be unlocked," Ferreira added.
If the plan is successful, Vale is likely to have a majority stake in the new company.
Sources familiar with the matter were quoted by Reuters as saying that the company is looking to list part of the unit in Toronto and London.
The Brazilian firm is also planning to initiate an initial public offering in Toronto and London.
Separately, the company said it has revised its planned investments for 2015 to $10.2bn, compared to previously announced $12.5bn, to avoid a cashflow squeeze due to slump in iron ore prices.
