Saudi Arabia’s Manara Minerals to Invest $3.4 Billion in Vale Base Metals

Vale, Brazil’s mining company, and Manara Minerals, a joint venture between Ma’aden and Saudi Arabia’s Public Investment Fund, signed an agreement under which 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 pursuant to which 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% 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% of VBM, while Engine No. 1 will hold a 3% stake. The closing is expected to occur by Q1 of 2024, subject to conditions precedent, including the approval of the relevant regulatory authorities.

Eduardo Bartolomeo, Vale’s CEO, said that these strategic investments are a major milestone in Vale’s path to accelerate accretive growth in our Energy Transition Metals business platform, creating significant long-term value to all of our stakeholders.

“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,” Bartolomeo said.

Robert Wilt, Executive Director of Manara Minerals and CEO of Ma’aden, said that their investment into VBM marks the company’s 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. Manara Minerals brings long-term capital, mining experience, and deep sector knowledge, and will function as a key strategic partner in global supply chain resilience and energy transition efforts,” Wilt added.

Chris James, Founder of Engine No. 1, said that they were proud to support VBM team in driving the next stage of growth for these critical assets. “VBM is best positioned to supply the responsibly sourced raw materials needed to build the infrastructure of the future,” he said.

Erik Belz, Engine No. 1’s head of private capital, said that their private capital mission is to partner with companies to create value by operating assets in a responsible and sustainable way while delivering critical materials.

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 also 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.