Saudis make first big global mining bet with Vale Metals stake

afr.com:

Saudi Arabia has made the first big deal in a push to deploy its vast wealth into the global mining industry, agreeing to buy a stake in Vale’s base metals unit.

Saudi sovereign wealth vehicle Public Investment Fund and Saudi Arabian Mining, known as Maaden, will purchase a 10 per cent stake in a company created to house Vale’s base metal assets, Vale said on Thursday. Separately, investment firm Engine No. 1 will buy a 3 per cent stake. The total amount to be paid under both agreements is $US3.4 billion ($5.1 billion).

Saudi Arabia has been on a global investment spree in recent years as it seeks to parlay its oil wealth into other sectors. PIF has snapped up stakes in video game makers and electric carmakers, but the Vale deal is the first major investment in mining since it set up a joint venture with Maaden in January called Manara.

In a protracted bidding process, the Saudi venture beat rival bidders including Japanese trading house Mitsui and the Qatar Investment Authority, according to people with knowledge of the matter. Goldman Sachs advised Vale. Bank of America worked with PIF and Maaden.

Besides the Vale deal, Maaden recently formed a joint venture with Ivanhoe Electric to develop mining projects in Saudi Arabia. The firm has announced partnerships with Barrick Gold to explore and develop two new areas in the kingdom, where they operate the Jabal Sayid copper mine.

Engine No. 1 is best known for its stunning victory over ExxonMobil two years ago when it placed three directors on the oil giant’s board. Since then, it has started an effort to buy up mining and fossil fuel assets to help companies decarbonise, especially as other investors exit. The San Francisco-based firm last year hired a Blackstone manager