Published: August 10, 2023 |

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Vale today signed a binding agreement with Manara Minerals, a joint venture between Ma’aden and Saudi Arabia’s Public Investment Fund. Manara Minerals will invest in Vale Base Metals Limited (VBM), the holding entity for Vale’s energy transition metals business, at an implied enterprise value of $26 billion.

Concurrently, Vale and investment firm Engine No. 1 entered into a binding agreement where Engine No. 1 will invest in VBM under the same economic terms. The total consideration to be paid to VBM under both agreements is $3.4 billion, for a 13 percent equity interest.

This strategic partnership will fast-track VBM’s expected $ 25-30 billion capital program over the next decade and help drive a significant potential increase in VBM’s production from about 350kt/year to 900kt/year in copper and from roughly 175kt/year to more than 300kt/year in nickel. This 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 consideration of $3.4 billion will be paid in cash to VBM at closing of the transaction, subject to customary adjustments. Manara Minerals will own 10 percent of VBM, while Engine No. 1 will hold a 3 percent stake. The closing is expected to occur by first quarter 2024, subject to conditions precedent, including the approval of the relevant regulatory authorities.

“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,” added Bartolomeo.

“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,” said Robert Wilt, executive director of Manara Minerals and CEO of Ma’aden.

“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,” added Wilt.

“We are proud to support the Vale Base Metals team in driving the next stage of growth for these critical assets. Vale Base Metals is best positioned to supply the responsibly sourced raw materials needed to build the infrastructure of the future,” said Chris James, founder of Engine No. 1.

“Our private capital mission is to partner with companies to create value by operating assets in a responsible and sustainable way while delivering critical materials. We look forward to building this important platform with Vale Base Metals,” said Erik Belz, Engine No. 1’s head of private capital.

TRANSACTION BACKGROUND

Over the last 18 months, Vale has taken a series of strategic actions to position its energy transition metals business as a critical mineral supplier of choice. This includes creation of VBM to drive operational efficiency and leverage a distinct future-facing commodities platform, supported by a new governance structure and dedicated board of directors with deep industry expertise, chaired by Mark Cutifani.

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.

In nickel these include the Onça Puma 2nd furnace in Brazil, the Pomalaa and Morowali projects in Indonesia, and the Voisey’s Bay Mine Expansion in Canada. VBM is a top ten copper producer in the Americas with an operating base concentrated in Brazil that includes the country’s largest copper deposit at Salobo with 40-plus years of remaining life, complemented by a strong pipeline of development and growth projects from Alemão, Cristalino and Bacaba in Brazil to the large- scale Hu’u project in Indonesia.

Vale, together with its subsidiaries, produces and sells iron ore and iron ore pellets for use as raw materials in steelmaking in Brazil and internationally. The company operates through Iron Solutions and Energy Transition Materials segments. The Iron Solutions segment produces and extracts iron ore and pellets, manganese, and other ferrous products; and provides related logistic services. The Energy Transition Materials segment produces and extracts nickel used to produce stainless steel, electric vehicles, and metal alloys; and its by-products, such as gold, silver, cobalt, precious metals, platinum, and others, as well as copper used in the construction sector to produce pipes and electrical wires.

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