The leading Rio de Janeiro mining firm Vale S.A. (NYSE: VALE) entered into a $3.4 billion partnership with a firm backed by Saudi Arabia’s government to accelerate the growth of the company’s energy transition metals business.
On Thursday, the firm announced a strategic partnership with Manara Minerals, backed by Saudi Arabia’s Public Investment Fund and the investment firm Engine No. 1.
Vale Base Metals, a division of Vale, is set to invest between US$ 25-30 billion in new projects across Brazil, Canada and Indonesia over the next decade. The total amount to be paid to VBM under both agreements is US$ 3.4 billion, for a 13 per cent equity interest.
The capital program is expected to drive a substantial increase in copper production from about 350kt/year to 900kt/year and in nickel production from roughly 175kt/year to more than 300kt/year.
Under the agreement, Manara Minerals will invest in Vale Base Metals Limited (VBM), the holding entity for Vale’s energy transition metals business, at an implied value of US$ 26 billion.
“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’s CEO Eduardo Bartolomeo said in a statement.
“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.”
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The strategic partnership is expected to fast-track VBM’s capital program and significantly increase VBM’s production. The program will generate jobs, economic growth, procurement and supplier opportunities, as well as socioeconomic benefits in communities across the key critical mineral jurisdictions where VBM operates in Brazil, Canada and Indonesia.
The total amount will be paid in cash to VBM at the closing of the transaction, subject to customary adjustments.
Manara Minerals will own 10 per cent of VBM, while Engine No. 1 will hold a 3 per cent stake. The closing is expected to occur by the first quarter of 2024, subject to conditions precedent, including the approval of the relevant regulatory authorities.
This partnership marks a major milestone in Vale’s path to accelerate growth in its Energy Transition Metals business platform. The company says the partnership is expected to create significant long-term value for all stakeholders while remaining committed to strong social and environmental practices and sustainable mining.
“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,” Ma’aden CEO Robert Wilt said.
“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.”
Natalia@mugglehead.com
