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Vale Base Metals confirms partial sell-off to Saudis and the US

Analysts say deal is part of a Vale strategy to grow value of its nickel and copper holdings ahead of electric vehicle demand .
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Vale has confirmed it is selling off part of its newly formed Vale Base Metals unit in two separate agreements.

Ten per cent of the company going to Saudi Arabia's Mining Co (Ma'aden) and the Saudi Public Investment Fund (PIF), and three per cent being sold  to U.S. investment firm Engine No. 1. The entire deal is valued at $3.4 billion according to a report from Reuters. 

Analysts are saying the deal is part of a larger strategy by Vale Base Metals to grow the value of its nickel and copper holdings in anticipation of the growing demand for battery electric vehicles.  Vale Base Metals has significant mining and refining operations in Canada including those in Sudbury. 

The cash deal will be subject to numerous legal conditions, including the approval of the relevant regulatory authorities, and it is expected the transactions are planned for completion by Q1 2024.

Heading up Vale Base Metals is Mark Cutifani, a well-known and popular global mining executive who once steered Vale's Sudbury operations.

"The total consideration to be paid to VBM (Vale Base Metals) under both agreements is US$3.4 billion, for a 13 per cent equity interest," the company said in a statement.

This strategic partnership will fast-track VBM’s expected US$25-30 billion capital program over the next decade and help drive a significant potential increase in VBM’s production from about 350kt/year (kilotonnes) to 900kt/year in copper and from roughly 175kt/year to more than 300kt/year in nickel, said the company.

“The total enterprise value of US$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, said the company.

On Thursday, Reuters reported that Vale's market capitalization in the Brazilian stock exchange was US$67.4 billion, based on Thursday's closing price.

"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 Eduardo Bartolomeo, Vale's CEO. 

"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," he added.

VBM is uniquely placed  as  North  America’s  largest integrated  nickel  producer  and  among  the largest copper businesses globally with the scale, resources and capital to deliver critical minerals essential for the global decarbonization and electrification megatrends. The company has secured agreements to supply low carbon and high purity nickel to major automakers and is strategically focused on expanding mine life and development of growth projects across the portfolio, said the Vale news release..  

Len Gillis covers health care and mining for