Vale signed a binding agreement with Manara Minerals, a joint venture between Ma’aden and Saudi Arabia’s Public Investment Fund, under which Manara Minerals will purchase a 10% stake in Vale Base Metals Ltd. (VBM for $2.6 billion. At the same time, Vale entered into a binding agreement with Engine No. 1, which will invest $800 million in VBM for 3% under the same terms.

The investment is expected to fast-track VBM’s $25-30 billion capital program over the next decade and help increase its copper production from about 350,000 metric tons per year (mt/y) to 900,000 mt/y and its nickel production from roughly 175,000 mt/y to more than 300,000 mt/y. VBM operates mines and processing plants in Brazil, Canada and Indonesia.

“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.

The total consideration, $3.4 billion, will be paid in cash to VBM at closing of the transaction, subject to customary adjustments. The closing is expected to occur by Q1 2024, subject to conditions precedent, including the approval of the relevant regulatory authorities.

“Manara Minerals’ investment into Vale Base Metals marks our first major investment into the global mining sector,” Robert Wilt, executive director of Manara Minerals and CEO of Ma’aden, said. “This strategic investment signifies our confidence in Vale’s strategic minerals business and will facilitate growth in VBM’s world-class asset portfolio.”

Over the last 18 months, Vale has taken a series of strategic actions to position its base metals business as a critical mineral supplier of choice. This includes creating 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 former Anglo American CEO Mark Cutifani.

VBM is North America’s largest integrated nickel producer and it has a large copper business 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 second furnace at Onça Puma in Brazil, the Pomalaa and Morowali projects in Indonesia, and the Voisey’s Bay mine expansion in Canada. VBM is a top 10 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.

Engine No. 1 is an investment firm focused on the investment themes of decarbonization and the relocalization of North American supply chains.