Vale not moving forward with critical-minerals subsidiary IPO, sources say

Brazilian iron-ore giant Vale SA VALE-N is shelving its plans to do an initial public offering of its critical-minerals subsidiary Vale Base Metals Ltd., amid political pushback in Brazil over the country potentially losing control over strategic mining assets, sources told The Globe and Mail.

London-based VBM was carved out internally from its parent in 2023, ahead of an eventual IPO and it has a separate management and investor-relations team.

VBM holds Vale’s global portfolio of copper, nickel and cobalt operations, which are spread across Canada, Brazil, Japan, Britain and Indonesia. The company bought its Canadian nickel assets from Inco Ltd. in 2006 for $19.4-billion.

As recently as March, Vale said the IPO was still in the cards with Marcelo Bacci, Vale SA’s chief financial officer, telling reporters that while the company wasn’t in a rush, the transaction could come later this year.

Three sources told The Globe that Vale recently decided not to proceed with the IPO at this time. Part of the reason for pulling the transaction, two of the sources said, is that the Brazilian government wasn’t on board with the IPO.

Brazilian President Luiz Inácio Lula da Silva is known for being an economic nationalist, and the two sources said he wanted Vale to retain control of VBM, whose portfolio includes large copper mines in the country.

The Globe is not identifying the three sources as they were not authorized to speak publicly on the matter.

Both Vale and VBM declined to directly address the IPO being put on hold.

VBM said in an e-mail statement that the company’s focus is to continue to grow, optimize its portfolio, and advance its growth pipeline.

“We are well-advanced on our transformation and building a consistent track record of delivery. Ultimately, our priority is to accelerate organic growth in copper and enhance operational efficiency in nickel,” the company said.

Vale, which is one of the world’s biggest mining companies, has long wanted to separate its core iron-ore business from its much smaller base-metals unit, in order to boost its valuation multiple.

The two sources said that the Brazilian government believed that the IPO would weaken the country’s standing as a global resources powerhouse as it would lose control of its copper assets.

The Globe reached out to both Mines and Energy Minister Alexandre Silveira and the office of Brazil’s President but did not receive a reply.

Brazil’s concerns about the potential hollowing out of its resource economy is occurring at a time when many countries around the world are getting more aggressive about protecting their domestic supply chains from supply shocks in critical minerals.

Canada, for example, has made it a priority to build new critical-minerals mines to protect itself during the trade war with the United States and to give the country leverage in trade talks with President Donald Trump’s administration.

Robust commodity prices mean that VBM is potentially missing a rare window to fetch an elevated valuation for the IPO. Copper on Thursday traded at US$6.57 a pound, not far from its record high.

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The shelving of the IPO raises questions about the next steps for its management team, some of whom were recruited specifically to ready the company for the transaction.

VBM hired South African mining veteran Shaun Usmar as CEO in 2024. Mr. Usmar was a long-time executive with Xstrata PLC, which was acquired by Glencore in 2013. Immediately prior to joining VBM, he was the CEO of royalty company Triple Flag Precious Metals Corp.

Vale Base Metals is 90 per cent owned by Vale, and Saudi Arabia investment company Manara Minerals owns the rest. Manara paid roughly US$2.5-billlion to acquire a 10-per-cent stake in 2024.

VBM has its global operations centre in Toronto. With the IPO being shelved, Bay Street bankers could be missing out on a huge payday on a multibillion-dollar transaction. A syndicate of investment banks to run the IPO was in the works, the two sources said, and meetings had already been held with potential investors.

While the IPO is on hold indefinitely, all three sources said it could be revived at a future date.