In a strategic move to accelerate growth in its energy transition metals platform, Brazilian major Vale on Thursday announced the sale of a 13% interest in its base metals unit for $3.4-billion.
Manara Minerals, a new venture between Saudi Arabian Mining Company (Ma'aden) and the Public Investment Fund (PIF) established to invest in mining assets globally, would invest in Vale Base Metals Limited (VBM).
Concurrently, Vale and investment firm Engine No. 1 entered into a binding agreement pursuant to which Engine No. 1 would make an equity investment in VBM under the same economic terms.
Manara Minerals will own 10% of VBM, while Engine No. 1 will hold a 3% stake. The closing is expected to occur by the first quarter of next year.
"Manara Minerals' investment into Vale Base Metals marks our first major investment into the global mining sector. 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,” commented Robert Wilt, executive director of Manara Minerals and CEO of Ma'aden.
Manara 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, he added.
Over the next decade, VBM is expected to invest $25-billion to $30-billion in strategic mineral projects, enabling a significant potential increase in copper production from about 350 000 t/y to 900 000 t/y and in nickel production from about 175 000 t/y to more than 300 000 t/y.
The total enterprise value of $26-billion underscores the unique endowment of Vale's energy transition metals business, one of the largest holders of resources and reserves in key critical minerals jurisdictions such as Brazil, Canada and Indonesia.
"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," said Vale CEO Eduardo Bartolomeo.
"With our high-quality portfolio, 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."