Saudi Arabia Makes Historic Investment in Brazilian Mining Company Vale

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), has made its first-ever investment in the mining sector by acquiring a stake in Brazilian mining company Vale. The investment, valued at $3.4 billion, will see PIF-owned joint venture Manara Minerals acquire a 10% stake in Vale’s base metals (VBM) unit, while US manager Engine No. 1 will hold a 3% stake.

Strengthening Trade Relations Between Saudi Arabia and Brazil

The announcement of the investment comes on the eve of a visit by a Saudi Arabian delegation to Brazil, with the goal of enhancing trade relations between the two countries. The arrival of the delegation, consisting of over 90 members, highlights the significance of this investment as the largest ever made in Brazil.

The investment marks a strategic move for Saudi Arabia, as it looks to diversify its investments and expand into the mining sector. Vale, as one of the largest holders of reserves and resources in key mineral jurisdictions, offers a unique opportunity for Saudi Arabia to enter this sector.

Accelerating Growth in Vale’s Base Metals Unit

The partnership with Manara Minerals and Engine No. 1 is expected to accelerate the growth of Vale’s base metals unit, VBM. The company has ambitious plans to invest between $25 billion and $30 billion in strategic mineral projects over the next decade. This investment will enable VBM to increase its copper production from 350,000 tons per year to 900,000 tons per year and its nickel production from 175,000 tons per year to over 300,000 tons per year.

Vale’s CEO, Eduardo Bartolomeo, sees this strategic investment as a significant milestone in their efforts to meet the growing demand for green metals essential to the global energy transition. He emphasizes their commitment to sustainable mining practices while delivering long-term value to all stakeholders.

The Significance of Vale’s Metals for Energy Transition Business

The valuation of Vale’s base metals unit at $26.0 billion demonstrates the unique endowment of their Metals for Energy Transition business. This business segment holds vast reserves and resources in critical minerals such as copper and nickel, which are crucial for the development of cleaner forms of energy.

Vale’s Metals for Energy Transition business operates in key jurisdictions worldwide, including Brazil, Canada, and Indonesia. This strategic positioning allows them to supply the increasing global demand for these critical minerals and solidify their role as a leading player in the industry.

The Future of Mining and Energy Transition

The investment by Manara Minerals and Engine No. 1 not only strengthens Vale’s base metals unit but also signals the importance of the mining sector in the global energy transition. As the world shifts towards cleaner energy sources and technologies, the demand for metals like copper and nickel will continue to rise.

This investment serves as a testament to the credibility and potential of Vale’s strategic minerals business. Manara Minerals CEO, Robert Wilt, highlights the significance of this investment as the first major investment in the global mining sector and its contribution to the growth of VBM’s world-class assets across various countries.

As the transaction is expected to close in the first quarter of 2024, subject to regulatory approval, all parties involved are optimistic about the long-term prospects and benefits this partnership will bring.

A Historic Milestone in the Mining Industry

The investment by Manara Minerals and Engine No. 1 in Vale marks a historic milestone in the global mining industry. Saudi Arabia’s entry into the mining sector through this strategic investment indicates the growing importance of critical minerals in the context of the energy transition.

With Vale’s extensive reserves and resources, coupled with its commitment to sustainable mining practices, they are well-positioned to meet the increasing global demand for green metals. This investment not only strengthens the partnership between Saudi Arabia and Brazil but also paves the way for further collaboration in the mining and energy sectors.

Summary

Valley, a Brazilian mining company, has signed a binding agreement with Manara Minerals and US manager Engine No. 1 to sell a 13% stake in its base metals unit for $3.4 billion. Manara Minerals, a joint venture between the Ma’aden mining company and Saudi Arabia’s sovereign wealth fund, will acquire a 10% stake, while Engine No. 1 will hold a 3% stake. This historic investment by Saudi Arabia in the mining sector marks the largest ever made in Brazil.

The partnership aims to accelerate the growth of Vale’s base metals unit, VBM, and support the global energy transition. Vale plans to invest between $25 billion and $30 billion in strategic mineral projects over the next decade, increasing copper production from 350,000 tons per year to 900,000 tons per year and nickel production from 175,000 tons per year to over 300,000 tons per year.

Vale’s base metals unit, valued at $26.0 billion, showcases the company’s unique position as one of the largest holders of critical minerals reserves and resources. This investment by Manara Minerals and Engine No. 1 highlights the importance of the mining sector in the energy transition and solidifies Vale’s role in supplying green metals.

The transaction is expected to close in the first quarter of 2024, subject to regulatory approval. The investment not only strengthens the partnership between Saudi Arabia and Brazil but also represents a significant milestone in the global mining industry, opening up further opportunities for collaboration in the mining and energy sectors.