Vale has entered into a binding agreement with Manara Minerals, a joint venture between Ma’aden and Saudi Arabia’s Public Investment Fund, for an investment in Vale Base Metals Limited (VBM), the holding entity for Vale’s energy transition metals business. The agreement values VBM at USD 26 bln.
Simultaneously, Vale has also signed a binding agreement with investment firm Engine No. 1 for their investment in VBM under the same economic terms. The total consideration to be paid to VBM under both agreements amounts to USD 3.4 bln, granting a 13pct equity interest.
This strategic partnership is set to expedite VBM’s expected capital program, which is estimated to reach USD 25-30 bln over the next decade. The collaboration aims to substantially increase VBM’s production capacity, targeting approximately 900,000 tons per year in copper and over 300,000 tons per year in nickel, compared to the current levels of around 350,000 tons per year in copper and 175,000 tons per year in nickel.
The USD 3.4 bln consideration will be paid in cash to VBM upon the closing of the transaction, subject to customary adjustments. Following the deal, Manara Minerals will hold a 10pct equity stake in VBM, while Engine No. 1 will have a 3pct stake. The transaction’s closing is expected to take place in the first quarter of 2024, subject to fulfilling conditions precedent, including regulatory approvals.
As North America’s largest integrated nickel producer and a significant global player in copper, VBM holds a unique position to meet the growing demand for critical minerals in the context of decarbonization and electrification megatrends. The company has already secured agreements to supply low carbon and high purity nickel to major automakers and is focused on expanding mine life and advancing growth projects across its portfolio.
VBM’s nickel projects encompass Onça Puma’s second furnace in Brazil, the Pomalaa and Morowali projects in Indonesia, and the Voisey’s Bay Mine Expansion in Canada. Additionally, VBM is a prominent copper producer in the Americas, with its operational base concentrated in Brazil. Notably, this includes Brazil’s largest copper deposit at Salobo, which boasts over 40 years of remaining life. VBM’s portfolio is further enriched by a robust pipeline of development and growth projects, extending from Alemao, Cristalino, and Bacaba in Brazil to the substantial Hu’u project in Indonesia.
