Saudi Arabia’s PIF sovereign wealth fund in advanced talks to acquire stake in Vale’s base metals unit

According to a recent Bloomberg report, the Public Investment Fund (PIF) of Saudi Arabia is the leading candidate to buy a significant stake in the base metals unit of the Brazilian mining company, Vale.

The Public Investment Fund is the sovereign wealth fund of Saudi Arabia. It is among the world’s most significant sovereign wealth funds, with total estimated assets of US$620 billion.

The PIF is negotiating a deal for approximately a 10% stake in the unit, which may be worth around US$2.5 billion.

This investment could outbid competitors such as Mitsui & Co from Japan and the Qatar Investment Authority.

The negotiation process may take several weeks and will be facilitated via a joint venture that PIF established with Maaden, a Saudi state-owned mining company, earlier this year, writes Bloomberg.

The joint venture, which aims to acquire minority interests in various mineral businesses, reflects Saudi Arabia’s attempts to diversify its oil-reliant economy and ensure access to strategic minerals.

Vale responded to these developments by seeking partnerships for its “Metals for Energy Transition” business to attract investment and stimulate growth.

The company, however, didn’t confirm the details of the potential investment or parties involved.

Last year, Vale started exploring options for its base metals unit due to increasing demand for metals like copper and nickel, crucial to the global transition towards cleaner energy.

The company operates nickel and copper mines in several countries, including Brazil, Canada, and Indonesia.

Vale has been considering separating its profitable iron ore mines from its base metals business to maximize value from assets deemed undervalued by the market.

The CEO, Eduardo Bartolomeo, aims to use the proceeds from the sale to fund US$20billion in investments to expand the business.