Vale S.A (VALE) made headlines at its recent investor day with its announcement to separate its base metal business into a new legal entity called Vale Base Metals. The mining giant is currently in negotiations to sell a 10% stake in the unit, while retaining the remaining 90% to maintain control over the business. This strategic move comes as a response to the surging demand for copper and nickel, driven by energy transition trends.
The Vale Base Metals segment, which contributed around 15% of the company’s revenues in 2021, will have an estimated asset base of $20 billion. It will encompass exploration efforts related to nickel, copper, cobalt, PGMs, gold, and silver, managing key assets like VCL, Indonesian Joint Ventures, Onça Puma, and the Salobo Copper Project.
With the rise in demand for copper and nickel expected to continue due to the shift towards electric vehicles and decarbonization efforts globally, Vale aims to capitalize on this trend. The company forecasts a substantial increase in nickel demand to 6.2 million tons by 2030 and copper demand to reach 37.4 million tons by the same year.
In addition to its base metals business, Vale also has plans to supply low-carbon nickel products to Swedish lithium-cell producer Northvolt AB and battery-grade nickel sulfate to General Motors for their Ultium battery cathodes. Furthermore, the company expects its Iron Solutions business to thrive on steel demand driven by emerging nations, global economic growth, urbanization, and energy transition trends.
Vale’s production targets for nickel and copper look promising, with estimates indicating significant growth over the next few years. As the company makes bold moves to position itself as a key player in the metals market, investors are closely watching to see how these developments will impact its stock performance in the coming months.
