Saudi Arabia’s Ma’aden and PIF JV to buy 10% stake in Brazil’s Vale Base Metals

The deal is expected to be completed in the first quarter of 2024

Ma'aden aluminium factory in Ras Al-Khair industrial area near Jubail City in Saudi Arabia. The company operates several extraction sites and mines in the kingdom. AFP

Manara Minerals Investment Company, a joint venture between Saudi Arabian Mining Company (Ma’aden) and the Public Investment Fund has signed a binding agreement to acquire a 10 per cent stake in Brazil's base metals company Vale as the company continues to pursue global mining investments.

The company is buying the stake in Vale, which has projects in Canada, Brazil and Indonesia, based on an enterprise value of $26 billion, Ma’aden said on Sunday in a statement to Saudi Arabia’s Tadawul stock exchange, where its shares are traded.

“Manara’s investment into Vale will play a key role in helping it expand the production of copper and nickel across its asset portfolio, which are critical to the development of new technologies that will benefit the global energy transition,” the company said.

“The acquisition furthers Ma’aden’s strategy of increasing the supply of strategic minerals and enabling Saudi Arabia to play a growing role in the global energy transition supply chains.”

The deal, which is subject to regulatory approvals and other conditions, is expected to be completed in the first quarter of 2024.

Ma’aden, which operates several extraction sites and mines in Saudi Arabia to produce gold, copper, iron ore and strategic minerals, has a 51 per cent stake in Manara, while the PIF holds a 49 per cent interest.

Mining is a key component of Saudi Arabia’s Vision 2030 plan, which aims to reduce the country's dependence on oil and gas revenue. The kingdom, Opec’s top oil exporter, aims to more than triple the mining sector’s contribution to the nation’s economic output by 2030.

Al Amar gold mine, southwest of Riyadh. Saudi Arabia currently has six gold mines owned by Ma'aden. Reuters

One of the world’s largest sovereign wealth funds, the PIF, which is at the heart of Riyadh’s economic diversification efforts, is a major driver of the domestic economy. It holds stakes in some of the kingdom’s biggest conglomerates and financial institutions.

Under a five-year strategy announced in 2021, the PIF aims to more than double the value of its assets under management to $1.07 trillion and commit $40 billion annually to develop Saudi Arabia's economy until 2025.

Globally, it holds stakes in public and private companies including Meta and Alphabet. The fund has set up more than 30 new companies and tripled its assets in the past few years.

The latest transaction will be financed through Ma’aden's own resources and any financial impact of the acquisition is expected to be reflected in the first half of 2024, according to the company.

Last month, Ma’aden said it would be increasing its share capital by 12.3 billion Saudi riyals ($3.2 billion) to strengthen its capital base to boost growth.

In May, it also signed an agreement with Vancouver's Ivanhoe Electric to purchase a 9.9 per cent stake in the company for $126.5 million.