Saudi firm to buy 10% stake in Vale’s energy metals business

Vale (NYSE: VALE) has inked a binding agreement with Manara Minerals, a joint venture between Saudi Arabia’s state-owned miner Ma’aden and the kingdom’s Public Investment Fund. In this deal, Manara Minerals will buy a 10% stake in Vale Base Metals Limited (VBM), the holding entity for Vale’s energy transition metals business.

The Brazilian miner also made a deal with San Francisco-based activist investment firm Engine No. 1, which will invest in VBM under the same terms for a 3% interest. The total consideration to be paid to VBM under both agreements is US$3.4 billion, for a total 13% equity interest.

Vale Base Metals is expected to invest US$25-30 billion in new projects across Brazil, Canada and Indonesia over the next decade, the company said.

The funding will help fast-track VBM’s expected growth and drive a significant potential increase in VBM’s production from about 350,000 tonnes per year to 900,000 tonnes yearly in copper and from roughly 175,000 tonnes to more than 300,000 tonnes per year in nickel, the company said.

Manara Minerals will own 10% of VBM, while Engine No. 1 will hold a 3% stake. The closing is expected to occur during the first quarter of 2024.

“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 for 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 VBM 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,” Wilt said in the statement.