Saudi Arabia Makes First Big Move in Mining with Vale Nickel and Copper Deal

Saudi Arabia made its first big move into the global mining industry by purchasing from Brazilian mining giant Vale 3% of its nickel and copper business in two separate deals totaling $3.4B. This also gives the Kingdom a shift of its oil assets into energy transition assets. Vale made the announcement after releasing details of its second quarter profits. Vale said the deal’s proceeds will help finance as much as $30 billion of investments over the next decade to tap growing demand for nickel and copper in the switch to electric vehicles.

“With our high-quality portfolio, we are uniquely positioned to meet the growing demand for green metals essential for the global energy transition,” Vale’s CEO Eduardo Bartolomeo said in a statement.

Vale sees a “significant potential increase in our copper production” to about 900,000 metric tons per year, from 350,000 tons. Nickel output would grow to more than 300,000 metric tons per year, from the current 175,000 tons.

Under the deals, a joint venture formed by Saudi Arabia’s Ma’aden and the Kingdom’s sovereign wealth fund will acquire 10% of Vale’s base metal unit, confirming earlier speculation, and U.S. investment firm Engine No. 1 will buy 3%.

Vale’s core business is iron ore production and distribution, its base metals unit also produces copper and nickel at mines in Brazil, Canada and Indonesia. Profits fell 78.2% from the previous year, dragged down by lower iron ore prices and issues with production.

Source: Vale

From the TradersCommunity Research Desk