Saudi Arabia is growing its metals and mining investment as demand for batteries soar. Brazil’s biggest mining company Vale SA on July 28 said that it had signed a binding agreement with the kingdom to sell a 10% stake in the company’s base metals unit. The shares will be purchased for $2.6 billion by Saudi Arabia’s Manara Minerals Investment Company, a new joint venture between state miner Maaden and Saudi sovereign wealth entity, Public Investment Fund. Separately, US investment fund Engine No. 1 will buy another 3% stake.
Some oil and gas majors have expressed their intent to go into battery metals. Exxon Mobil Corp. and Chevron Corp. have announced plans to explore lithium extraction. Equinor ASA invested in a lithium project in 2021. While Saudi Arabia, one of the largest oil-producing nations, has mining assets, it hasn’t historically viewed it as a strategic sector.
Vale will raise $3.4 billion from the deal, scheduled for completion in the first quarter of 2024. Vale’s base metals unit includes nickel and copper production and accounted for almost a fifth of its revenue in 2022.
Before the boom in battery demand, Vale had planned to spin off its base metals unit in 2014 while BHP Group was still selling its Nickel West asset as recently as 2019. Nickel’s importance in lithium-ion batteries brought the focus of mining majors back to the metal. BloombergNEF estimates that demand for nickel in batteries will reach 1 million metric tons by 2028, growing more than threefold.
BloombergNEF (BNEF), Bloomberg’s primary research service, covers clean energy, advanced transport, digital industry, innovative materials and commodities. BNEF helps corporate strategy, finance and policy professionals navigate change and generate opportunities. Explore more content on the BNEF blog.
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