Can you outline notable developments at Vale Base Metals (VBM)?

VBM plays a crucial role ensuring security of supply of nickel and copper with its significant critical mineral endowment in Canada and across the world. However, the value of our portfolio is not reflected in the share price of our parent company, Vale S.A. Recognizing this, Vale S.A. carved out the Base Metals business last year into a standalone entity, bringing in Saudi-owned mining investment company Manara Minerals as an investor (10% stake) in VBM. We are now focused on unlocking and showcasing the significant value of our endowment before considering a potential IPO. 

What are the biggest challenges facing VBM?

In Brazil, we have about 30 million tons of copper reserves. To unlock the value there, we need to be as cost competitive as possible. The world needs more copper. We see the supply side struggling to meet demand with cost overruns and delays. We have district scale deposits in Brazil that are sources of significant copper growth potential. The challenge is to get our costs in a good place and buck the sector-wide trend of cost overruns and delays. 

More broadly, we cannot overburden our operating assets, so we have initiated meaningful restructuring at VBM. I want to focus on reconnecting with the operations and invoke an owner-operator model, with an emphasis on decentralization, cost competitiveness and agility. 

What advantages has VBM’s vertical integration brought, and will this be a focus going forward?

VBM has a significant mining complex in Sudbury and will be ramping up its US$2.94 billion expansion at Voisey’s Bay through 2026. We are also looking at investing in a nickel sulphate facility in the future in Bécancour, Québec, with JV partners to meet the needs of our customers. When you have the vertically integrated platform, as we do, it allows us to offer a wider variety of products to our diverse client base.

Does the current landscape in Canada present opportunity for M&A?

Currently, we do not have the multiple and the currency to go on offence and acquire assets. The best way to create value for investors at the moment is by unlocking the value potential in our mineral endowment and our organic pipeline. However, we will always keep an eye out for opportunities in the M&A space. Whether we are an acquirer or acquiree, the focus must always be on creating value for investors. If, for example, we were to be a potential target for an acquisition, the reality is that there is so little visibility of the true value of our mineral endowment, by virtue of being overshadowed by Vale S.A.’s giant iron ore business. Of the institutions that analyze and model Vale S.A., few build out the value potential that exists within VBM. This is one of the best kept secrets in the sector at present. We need to both unlock our value potential while showcasing it to the world. 

What are your priorities in 2025 and is VBM anticipating an IPO in the future? 

Our first priority is completing the restructuring to make VBM as competitive as possible and allow us to handle whatever the commodity cycle and price environment throws our way. Our second priority is to optimize our portfolio and run our assets as competitively as possible. Our overarching goal is to aggressively pursue growth and value through our copper endowments in Brazil. 

As for an IPO, we are using a notional three-year time frame. There is discipline that comes with being prepared for a possible IPO. There is no guarantee we will do one, but giving ourselves a three-year time frame to revitalize the business will allow us to revisit the idea with our two primary owners, Vale S.A. and Manara Minerals. 

We have a challenging capital allocation puzzle to solve to get the business in shape as global supply chains shift rapidly. I am excited about the value VBM can unlock as a whole, and I believe the role it will play in North American supply chains is highly under-appreciated.