Brazilian mining company Vale secured two binding agreements that will generate USD 3.4 billion in foreign investment for its energy transition metals business, Vale Base Metals (VBM).
The first was with Manara Minerals, a joint venture formed in January this year between Saudi state-owned company Ma’aden and the country’s sovereign fund PIF, with an implied enterprise value of USD 26 billion. At the same time, Vale entered into a second binding agreement with U.S.-based investment firm Engine Nº 1 under the same economic terms.
Both agreements grant the new partners a 13 percent stake in the company’s capital – 10 percent for Manara and 3 percent for Engine Nº 1.
In addition to bringing new investment to its base metals business, Vale said during a conference call this Friday that both deals also open the doors to the Middle East market for the Brazilian company.
Eduardo Bartolomeo, Vale’s CEO, says that the market opportunities are not limited to the so-called transition metals (copper, nickel), but also to operations related to iron ore and logistics that could take advantage of the distribution hubs that the company has in Asia.
According to the company, the sale is also a crucial aspect of its plan to improve the management of its nickel and copper assets in anticipation of a surge in demand for these metals from the electric vehicle market. The company said that VBM plans to invest between USD 25 billion and USD 30 billion in new projects in Brazil, Canada, and Indonesia over the next decade.
In addition to strengthening VBM’s financial structure, the new agreement are expected to increase the company’s production, taking the volume of copper produced from around 350,000 to 900,000 tons per year and that of nickel from 175,000 to more than 300,000 tons per year. VBM is the largest nickel producer in North America and one of the largest copper producers in the world.
Boosting its mining industry is part of Saudi Arabia’s Vision 2030 initiative to diversify its economy and reduce its dependence on oil. In practice, the Vale partnership will give Riyadh access to assets in Canada, Brazil, and Indonesia, and will gradually insert Saudi Arabia into the global mineral supply chain.
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