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Vale has received several bids for its base metals business after talks with parties ranging from carmakers to sovereign wealth funds, the chief executive said, predicting the dividend would be “even bigger” than the Brazilian mining group itself.
Eduardo Bartolomeo said “non-binding offers” are in place for up to 10 percent of the unit, which produces materials needed for energy transition and is a standalone entity separate from Vale’s main iron ore operations.
A partner could be an automotive manufacturer, an industry group, a government investor or a pension fund, he told the Financial Times. “That’s what I’m talking to,” he said. “all of them”
Vale is in talks to bring the automaker on board, Bartolome added, without giving further details.
Iron ore provides 80 per cent of Vale’s revenue, with a market capitalization of $79bn making it the largest publicly listed company in Latin America.
But Bartolomeo said the base metals business — nickel mines in Canada and Indonesia, copper mines in Brazil, and interests in cobalt and platinum group metals — could one day outgrow its parent and float it on the stock market.
“Basically, we want to close this business,” Bartolome said. “This thing could be bigger than Vale. Not tomorrow, not even next year – when they look long term.
RBC analysts valued the Vale Base Metals unit at $22.3bn in a recent research note. However, the gloomy global economic outlook that has weighed on copper prices makes that difficult to achieve.
Share prices for major mining companies have risen over the past year as demand for energy transition metals has grown. Vale Sao Paulo’s shares rose 17 percent.
In the year As China’s once-insatiable demand for iron ore begins to cool following a 2019 dam disaster in its home country that killed 270 people, the Brazilian miner is focusing on shifting to metals with higher growth potential.
“This is a supercycle,” Bartolome said, referring to metals needed for transportation and power electrification. “What you’re looking at in Nickel is this supercycle.”
Vale previously indicated it might have an investment partner as early as December, but the timing has slipped and a deal is expected in the first half of this year.
Even if a suitable partner is not found, the work from the base metal works will continue, Bartolomeo said.
The new investor will not be a mining company like BHP or Rio Tinto, which is trying to drive rivals out of iron ore.
A liquidation deal where Vale would supply steel for a long time could be part of the new investment arrangement, he added. Vale already has deals to supply nickel for Ford and Tesla batteries.
Bartolomeo Valle said the Crown was not concerned about taking back the world’s largest iron ore and instead focused on expanding into value-added minerals such as hot briquetted iron.
“We want to be a good player at the highest level,” Bartolomeo said. “Being the biggest is not an issue for us.”
With Beijing lifting Covid-19 restrictions, Bartolomeo added that he was “cautiously optimistic” about China, which accounts for about half of the world’s total steel output.
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