Saudi Arabia is making a foray into copper and nickel mining with the acquisition of a stake in Vale's base metal business.
In a $3.4-billion cash deal, Saudi Arabian Mining Company and the Saudi Public Investment Fund will buy a 13% stake in the Brazilian miner's copper and nickel operations, the Financial Times reported, noting the deal valued the business at $26 billion.
The two Saudi entities will operate as a joint venture, dubbed Manara Minerals. The company was set up in January.
Saudi Arabia last year gave a strong signal it has big mining plans when it hosted the inaugural edition of the Future Minerals Summit. The event brought together the mining industry, investors, and government officials from the Middle East, Africa, and Asia with the stated goal of advancing new frontier mining regions in the context of the energy transition.
Saudi Arabia has abundant mineral resources in addition to its oil wealth, and it is making the first steps toward utilizing them and taking advantage of the transition push.
Saudi Arabian Mining Company, or Ma'aden, is at the forefront of that foray, in partnership with various international mining companies.
Vale, for its part, has been considering a spin-off and a listing for its copper and nickel business, the FT recalls, with the company's chief executive telling the outlet in an interview that the business unit had the potential to outgrow its parent.
"Vale base metals is best positioned to supply the responsibly sourced raw materials needed to build the infrastructure of the future," the head of activist hedge fund Engine No.1 told the FT.
Vale's chief executive agrees: "We are uniquely positioned to meet the growing demand for green metals essential for the global energy transition," Eduardo Bartolomeo said.
Copper and nickel are among the metals critical for the transition because of their use in wind and solar installations, and EVs and battery storage.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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