Massive deal with Saudis will help Vale fund nickel, other mining projects

Vale Base Metals (VBM) Ltd. has signed deals worth $3.4 billion with two Saudi Arabian-owned entities as the company works to develop its base metals operations as a separate entity.

The agreement will help Vale fund billions of capital projects in the base metals unit planned across its global holdings. The base metals unit is focused on increasing production of minerals needed for the conversion of the auto industry from gas-powered to electric vehicles.

“This strategic partnership will fast-track VBM’s expected US $25-$30 billion capital program over the next decade,” Vale said on its website in announcing the agreement.

“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 goal is to increase base metals production of copper to 900,000 metric tons from 350,000 tons and of nickel to more than 300,000 tons from 175,000 tons.

“We see these strategic investments as a major milestone in our path to accelerate accretive growth in our energy transition metals business platform,” Eduardo Bartolomeo, Vale’s CEO, said in the news release.

"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."

A mining company based in Toronto has been fined $50,000 for a workplace injury at a job site near Thunder Bay in January 2020. (File)

According to a report from BNN Bloomberg, the Kingdom’s sovereign wealth vehicle, Public Investment Fund, and Saudi Arabian Mining Co., known as Maaden, is purchasing a 10 per cent stake in a company created to house Vale’s base metal assets, Vale said Thursday.

Separately, investment firm Engine No. 1 will buy a three per cent stake. The total amount to be paid under both agreements is $3.4 billion.

Saudi Arabia has been on a global investment spree in recent years as it seeks to parlay its oil wealth into other sectors, the Bloomberg story said.

After years of deliberation, Vale created the separate base metals unit largely from assets in Canada, Brazil and Indonesia that were acquired in the purchase of Canada’s Inco Ltd. announced in 2006.

“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,” Vale said.

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“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.”

-- With files from BNN Bloomberg