In a first, Saudi Arabia seals deal with Brazil’s largest miner VBM

Saudi Arabia has sealed a major mining industry deal after a joint venture that includes the kingdom’s sovereign wealth fund agreed to buy a stake in the base metals unit of Brazil's largest mining company. 

Manara Minerals Investment Company, a new joint venture between the kingdom’s Public Investment Fund and the Saudi Arabian Mining Company Ma’aden, will invest in Vale Base Metals Limited (VBM), according to Vale's press release Thursday. 

Manara Minerals will acquire 10% of Vale's base metal unit. Per the statement, the total value of the acquisition, which in addition to Manara's 10% also included a 3% stake by US investment firm Engine No. 1, stands at $3.4 billion. The enterprise value of Vale’s energy transition metals business is $26 billion.

Robert Wilt, executive director of Manara Minerals and CEO of Ma’aden, celebrated the agreement with VBM as a historic first. 

“Manara Minerals’ investment into Vale Base Metals marks our first major investment into the global mining sector,” he said, according to the Vale press release, which stated that VBM has taken a series of strategic actions to position itself as a “critical mineral supplier of choice” of energy transition metals such as copper and nickel over the past 18 months. 

Vale, the world's third-largest mining company according to the US International Trade Administration, gives the Saudi joint venture access to assets in Canada, Brazil and Indonesia that were received in the acquisition of Canada’s Inco Ltd. announced in 2006 and that predominantly make up VBM’s assets, according to Bloomberg. 

Vale said that Saudi Arabia’s investment will help achieve its goal of increasing its copper and nickel production. 

“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 350 kt/year (thousands of tons per year) to 900kt/year in copper and from roughly 175kt/year to more than 300kt/year in nickel,” said the company, considered North America’s largest integrated nickel producer, in a statement. 

Manara Minerals’ goal is aligned and aims to invest in iron ore, copper, nickel and lithium to expand the global supply of critical metals needed for energy transition, read the Vale statement. 

Copper and nickel in particular are expected to play a major role in the future of clean and renewable energy, especially in the electric vehicle industry, where demand is on the rise.  

Saudi Arabia seeks to meet this demand and rapidly raise its mining of copper and other minerals, as reported in an Al-Monitor Pro memo by Afshin Molavi.

Global demand for refined copper is expected to nearly double to 49 million metric tons by 2035, according to S&P Global.  

Nearly $23 billion will need to be invested annually in future copper production to meet this immense and growing need, reported global research and consulting firm Wood Mackenzie. 

A combination of Saudi Arabia’s naturally available deposits and a government push to develop its mining sector positions the country to benefit from the major rise in copper demand, wrote Molavi. 

The global mining market grew from $2022.6 billion in 2022 to $2145.15 billion in 2023 at a compound annual growth rate of 6.1%, according to the Mining Global Market Report 2023 by the Business Research Company.