Vale to sell 13% stake in base metals unit for $3.4 billion

Vale (NYSE: VALE) has reached two separate agreements to sell a total 13% stake in its transition metals business, Vale Base Metals (VBM), for total consideration of $3.4 billion, with the aim of fast-tracking its production of copper and nickel.

Under the deals, Manara Minerals, a joint venture formed by Saudi Arabian Mining Co (Ma’aden) and the country’s Public Investment Fund (PIF) will acquire 10% of Vale’s base metal unit, while US investment firm Engine No. 1 will acquire 3%. The closing is expected to occur by the first quarter of 2024.

The sale is part of Vale’s strategy the improve the management of nickel and copper assets, given expectations for soaring demand for the metals from the electric vehicle market, the company said, adding that VBM is expected to invest $25-30 billion in new projects across Brazil, Canada and Indonesia over the next decade.

The partnership is expected to fast-track VBM’s capital program over the next decade and help drive a significant potential increase in VBM’s production from about 350,000 t/y to 900,000 t/y in copper and from roughly 175,000 t/y to more than 300,000 t/y in nickel, the company 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,” Vale CEO Eduardo Bartolomeo said in a statement.

“We are uniquely positioned to meet the growing demand for green metals essential for the global energy transition, while remaining committed to strong social and environmental practices and sustainable mining,” Bartolomeo said.

“Manara Minerals’ investment into Vale Base Metals marks our first major investment into the global mining sector,” Robert Wilt, executive director of Manara Minerals and CEO of Ma’aden, said.

“This strategic investment signifies our confidence in Vale’s strategic minerals business and will facilitate growth in VBM’s world class asset portfolio across all of the countries it operates in. Manara Minerals brings long-term capital, mining experience, and deep sector knowledge, and will act as a key strategic partner in global supply chain resilience and energy transition efforts.”  

(With files from Reuters)