Vale not planning more equity sales in Base Metals, may consider IPO in 3-4 years

Brazilian miner Vale is not seeking new partners for its Base Metals unit following a recent sale of equity but could consider an IPO of the unit in three or four years’ time following production growth, CEO Eduardo Bartolomeo said on the sidelines of the Financial Times Mining Summit in London this week.

The priority of Vale Base Metals is now to execute on its projects and grow more rapidly, Bartolomeo said.
Vale is a major global producer of iron ore, copper and nickel.

“In three years we may be perceived by the market: now we have to execute,” the CEO said. “Iron ore and base metals have both been underperforming… we have projects in the pipeline.”

Vale in Q2 increased output of iron ore and copper although nickel output fell, mainly due to maintenance. The company expects to produce between 310 million-320 million mt iron ore this year, 335,000-370,000 mt copper and 160,000-175,000 mt nickel, it said in July.

The Base Metals unit may be worth $20-25 billion, Bartolomeo indicated.

Vale sold a total of 13% of its Base Metals unit in late July to Saudi Arabia’s Mining Company Ma’aden, the Kingdom’s Public Investment Fund and US-based investment firm Engine No. 1, described by Bartolomeo as an “ESG activist”.

Competitors may now be looking at M&A opportunities in mining and metals but Vale doesn’t need that due to its “huge ” existing base metals mine assets in both Brazil and Canada, as well as its “unique” high-quality iron ore assets in Brazil, the Vale CEO said in a session at the event.

The iron ore assets will be used to help diversify Vale’s activities into so-called “mega-hubs” to be sited in the Middle East, Brazil and potentially North America to produce low-carbon steelmaking raw materials to help with steel industry decarbonization, Bartolomeo said.

Energy supplies are meanwhile key to decarbonization and the Middle East, Gulf of Mexico and Brazil can be considered the areas where energy is most competitive, the CEO said.

Brazil’s high proportion of renewable energy in its overall electricity production (more than 80%) gives it potential to be “disruptive” in this area, according to Bartolomeo. When the country starts to bring on stream various planned green hydrogen production facilities this should “crack the nut,” he said.

Platts assessed the 62% Fe Iron Ore Index at $119.45/dry mt CFR North China on Oct. 5, down 0.5 cent/dmt on the day.

Platts is part of S&P Global Commodity Insights.
Source: Platts