Brazilian mega-mining company, Vale (NYSE: VALE), recently announced that it will sell a 13% stake in its transition metals business for US$3.4B, with the aim of boosting its copper and nickel output.
Vale has two separate agreements, with Manara Minerals (a joint venture between Ma’aden and Saudi Arabia’s Public Investment Fund) taking 10%, and US investment firm Engine No. 1 taking the remaining 3%. VBM, Vale’s base metals unit, will have an estimated enterprise value of US$26B upon completion of the deals, which is likely to occur by the first quarter of 2024.
VBM is expected to invest between US$25-30B in new projects over the next decade, and the sale is part of its broader strategy to meet the rising demand for nickel and copper assets for electric vehicle (EV) batteries.
This also comes as one of the first significant deals for Saudi Arabia in a push to position its substantial wealth into the global mining industry.
Vale predicts the partnership will fast-track VBM’s capital programme across its operations in Brazil, Canada, and Indonesia, helping increase production potential from about 350,000tpa to 900,000tpa in copper, and from roughly 175,000tpa to more than 300,000tpa in nickel.
The investment reflects Vale’s strategy to expand its Energy Transition Metals business to provide much-needed green metals to the global energy transition, while keeping operations sustainable and environmentally friendly.
Vale CEO, Eduardo Bartolomeo, said, “We see these strategic investments as a major milestone in our path to accelerate accretive growth in our Energy Transition Metals business platform, creating significant long-term value to all of our stakeholders”.
The CEO of Ma’aden, Robert Wilt, responded by highlighting the significance of this first major investment in the global mining sector for Manara Minerals, a joint venture between Saudi Arabian Mining Co and the country’s Public Investment Fund: “This strategic investment signifies our confidence in Vale’s strategic minerals business and will facilitate growth in VBM’s world-class asset portfolio. Manara brings long-term capital, mining experience, and deep sector knowledge, and will act as a key partner in our partnership with Vale.”
As the EV market grows, there will be a rise in the demand for base metals such as nickel and copper, needed for vehicle batteries. The investment by Manara Minerals and Engine No.1 is expected to encourage Vale’s capacity to produce these commodities in response to this increasing demand.
