Saudi’s PIF emerges as lead bidder for $2.5 billion Vale base metals stake

Saudi Arabian Crown Prince Mohammed bin Salman. (Image: Wikimedia Commons)

Saudi Arabia’s Public Investment Fund (PIF) is leading the bid to acquire a $2.5 billion stake in Vale’s nickel and copper operations, Bloomberg News reported on Tuesday.

The report said PIF might strike the deal for a roughly 10% stake through a joint venture it set up in January with Ma’aden, citing people with knowledge of the matter.

The wealth fund is poised to beat out rival bidders, including Japanese trading house Mitsui & Co. and the Qatar Investment Authority, but it may take at least several weeks to hash out a formal agreement, the people said.

Spokespeople for PIF and Ma’aden didn’t immediately provide comments or couldn’t be reached. Representatives for Mitsui and QIA declined to comment. Vale said that, at this stage, it cannot confirm the amount of an eventual investment nor the parties involved, according to a Tuesday statement.

Shares of Vale were down 2.8% as of 1:12 p.m. in New York.

The stake sale is part of Vale’s decision to separate its iron ore operation from its copper, nickel and platinum assets, into a new firm named Vale Base Metals that will be based in the UK.

Vale Base Metals would have nickel mines in Canada and Indonesia, copper mines in Brazil, and interests in cobalt and platinum group metals.

“This thing can get even bigger than Vale. Not tomorrow, not even next year — when you look long-term,” chief executive Eduardo Bartolomeo told the Financial Times.

Separating the two sides of the business is key to accessing “competitive” capital needed for an estimated $20 billion of base metal investments, Bartolomeo said in December.

The plan has been on Vale’s cards for years as most nickel and copper assets the company were acquired via the $17 billion acquisition of Canada’s Inco in 2006.

(With files from Reuters and Bloomberg)