Brazil-based metals and mining company Vale has signed two separate binding agreements to divest an equity stake of 13% in its base metals division Vale Base Metals (VBM) for $3.4bn.
Under the terms of the agreement, Manara Minerals will acquire 10% of Vale Base Metals while US-based investment firm Engine No.1 will own the remaining 3% of the base metals unit.
Manara Minerals is a joint venture (JV) between Saudi Arabian Mining Company (Ma’aden) and the country’s sovereign wealth fund Public Investment Fund.
Vale Base Metals possesses nickel assets, which encompass the Onça Puma 2nd furnace in Brazil, the Pomalaa and Morowali projects in Indonesia, and the Voisey’s Bay Mine Expansion in Canada.
As one of the top 10 copper producers in the Americas, the unit primarily operates in Brazil, with its flagship copper deposit at Salobo. Additionally, the Vale unit has a lineup of development and growth projects, ranging from Alemão, Cristalino, and Bacaba in Brazil to the Hu’u project in Indonesia.
Manara Minerals executive director and Ma’aden CEO Robert Wilt said: “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.”
The transactions give an implied enterprise value of $26bn for Vale’s energy transition metals business.
According to the Brazilian mining company, the new collaboration will help fuel a substantial potential increase in Vale Base Metals’ production from approximately 350 kilotons per year (kt/year) to 900kt/year in copper and from about 175kt/year to over 300kt/year in nickel.
Besides, the deals are expected to accelerate the base metals division’s $25-30bn capital programme over the next decade.
Furthermore, the investments are projected to create jobs, economic growth, procurement, and supplier opportunities, and socioeconomic benefits in communities across the key critical mineral jurisdictions where the unit operates in Brazil, Canada, and Indonesia.
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.
“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.”
Subject to the meeting of the preceding conditions, including the approval of the relevant regulatory authorities, the closing of the deals is anticipated to take place by Q1 2024.
