Vale and Glencore planning copper joint venture

Vale Base Metals signs deal with Swiss mining company to develop area already under exploration in Canada

 

 

12/03/2025

Vale has taken another step toward doubling its copper output by 2030. The mining company announced Tuesday (2) that its Canada-based subsidiary Vale Base Metals (VBM) has signed an agreement with Switzerland’s Glencore to assess the potential joint development of a copper area already under exploration in the Sudbury Basin region of Ontario.

If the partnership advances, VBM and Glencore intend to form a joint venture to develop the area. In a statement Tuesday, Vale highlighted that, over 21 years, the site could yield 880,000 tonnes of copper at a cost of $1.6 billion to $2 billion. A final investment decision is expected in the first half of 2027. Copper is a critical metal for the energy transition.

Initial talks between the two companies began 20 years ago. “The agreement sets a framework to explore the significant synergies in mining the underground deposits of both companies,” Vale said in the statement. Glencore has infrastructure in the region tied to the Nickel Rim South mine.

At Vale Day, the company’s investor event held this year in London, VBM president Shaun Usmar said that without Vale, Glencore’s only option would be to shut the mine. For Vale, meanwhile, investing alone in local infrastructure would not be economically attractive.

“We have work to do through the first half of 2027 to bring together our equipment, our team, reach agreements, work with our stakeholders and partners, because there are different unions and many other things we need to move forward,” Usmar said. “The opportunity now is how we can improve returns, find ways to reduce capital intensity, and, if we can, bring [the project] forward,” he said. Production potential could be higher depending on new discoveries.

The 880,000 tonnes over 21 years translates into an average of 21,000 tonnes of copper per year, or a total of 42,000 tonnes annually when including associated ores such as nickel and cobalt, Usmar said. Analysts Leonardo Correa and Marcelo Arazi of BTG Pactual said in a report that the agreement with Glencore allows Vale to increase copper exposure without committing significant capital.

The possibility of a deal with Glencore comes at a strategic moment. The company says it expects to end 2025 with production of about 370,000 tonnes of copper, meeting the target set in 2024. For 2026, output is expected between 350,000 and 380,000 tonnes, reaching between 420,000 and 500,000 tonnes in 2030. By 2035, annual output would reach 700,000 tonnes.

In iron ore, Vale’s flagship business, the company expects to close 2025 with production of 335 million tonnes, the top end of the target disclosed at the 2024 Vale Day. For next year, a slight reduction: at the 2024 event, Vale projected output between 340 million and 360 million tonnes in 2026; that range is now trimmed to between 335 million and 345 million tonnes. For 2030, the company expects to extract 360 million tonnes.

Another commodity relevant to electrification and the energy transition, nickel is expected to close 2025 with production of 175,000 tonnes, the top of guidance. For 2026, Vale expects output between 175,000 and 200,000 tonnes, rising to between 210,000 and 250,000 tonnes in 2030.

At Tuesday’s event, Vale CEO Gustavo Pimenta acknowledged that the market still harbors doubts about the company’s ability to deliver on its targets, because in the past, promises were not always fulfilled. He said many of the projects coming online or progressing as planned have been in the portfolio for more than a decade. Vale’s investment forecast for 2026 is between $5.4 billion and $5.7 billion, in line with the roughly $5.5 billion planned for 2025.

One word repeated by Pimenta and other executives Tuesday was “endowment,” a concept used to describe a company’s asset base. “Vale’s potential lies in bringing its assets into production,” Pimenta said when asked in a press conference about the possibility of taking VBM public. An IPO, he said, may be an option in the future, but that is not the focus today. A potential VBM listing entered the radar after Vale completed, in July 2023, the sale of 13% of VBM to Saudi Arabia’s Manara Minerals and California-based investment fund Engine No.1 for $3.4 billion.

In iron ore, Vale has already said it wants to regain the position of world’s leading producer. The company also aims to climb the market-cap rankings, where it has slipped following the dam disasters involving Samarco in Mariana (Minas Gerais) and Vale itself in Brumadinho (Minas Gerais). In London, the company reinforced not only that it will meet its production commitments but also that it is committed to operational stability, enhanced safety, and consistent shareholder payouts.

“Vale has cleared several problems from its path,” says Itaú BBA analyst Daniel Sasson, who spoke with Valor before Vale Day. In recent years, the company resolved the CEO succession and signed a definitive Mariana settlement. “With these off-field issues resolved, people have become more focused on operations, which have been going very well,” Sasson said, adding that iron ore above $100 per tonne supports strong cash generation. January contracts on the Dalian exchange closed at $113.19 per tonne on Tuesday.

A source told Valor that Vale’s stock looks “cheap” compared with peers not because of the business itself but because perceived risk remains high relative to other miners. The company is still viewed as dependent on iron ore and Chinese demand at a time when China’s growth is weaker. “That alone drags the multiple down,” the source says. Yesterday, Vale closed with a market cap of $58.1 billion, above Fortescue ($44.2 billion) and Anglo ($40.2 billion) but behind Rio Tinto ($116.2 billion) and BHP ($142 billion), according to Valor Data.

The journalist’s travel was facilitated by an invitation from Vale.

*By Rafael Rosas — London

Source: Valor International

https://valorinternational.globo.com/

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Companies seek to pay dividends with redeemable preferred shares

Novo Mercado firms ask B3 stock exchange to ease rules amid push to preserve tax exemption

 

 

 

12/03/2025

Major publicly traded companies listed on Brazil’s Novo Mercado, the B3 segment with the highest corporate governance standards, are preparing to ask the Brazilian stock exchange for flexibility that would allow them to distribute dividends using redeemable preferred shares as a form of stock bonus.

This mechanism would enable companies to distribute dividends this year without an immediate cash outflow, allowing them to benefit from the income tax exemption on accumulated profits calculated through the end of the year.

Although the Senate’s Economic Affairs Committee (CAE) approved a bill on Tuesday (2) extending the deadline for calculating and paying such dividends through April of next year—aligning it with companies’ annual financial reporting—the search for tax-efficient payout strategies remains urgent.

The bill also introduced the concept of a “non-taxable profit reserve,” which would allow companies to distribute these earnings tax-free until 2028. This provision aims to give legal clarity to corporations, whose regulations require dividends to be paid within the same fiscal year in which they are declared.

Still, uncertainty remains over whether the Senate-approved text will survive unaltered, as the bill must return to the Lower House and then be signed into law. Tax experts recommend companies proceed with planning as though the original deadlines remain, to maximize the tax-exempt portion of retained earnings.

To that end, several companies are evaluating whether to distribute dividends using redeemable preferred shares. Under current rules, companies listed on the Novo Mercado are allowed to issue only common shares, which come with voting rights.

Temporary waiver

As a result, requests have begun arriving at B3 for a temporary waiver that would allow these companies—some of the country’s largest, with billions of reais in retained profits—to issue redeemable preferred shares for this specific purpose, without violating listing rules.

The Brazilian Association of Listed Companies (Abrasca) is leading this effort after being approached by member firms. In recent days, the association has surveyed companies to assess demand for such issuances, according to a source. Companies confirmed their interest on Tuesday, the person said.

B3 is expected to decide in the coming days whether to grant this flexibility, so companies can hold shareholder meetings before year-end. Brazilian corporate law requires a minimum 21-day notice to call such meetings.

Abrasca told its members the timeline is tight, as companies choosing this route must complete corporate approvals before year-end. In a letter reviewed by Valor, the association said B3 has shown a “willingness” to evaluate an “exceptional treatment with urgency.”

A person close to the matter said B3 is currently reviewing the request. Approval would depend on the condition that the “one share, one vote” principle is preserved, meaning the redeemable preferred shares must carry voting rights equivalent to common stock until they are redeemed. A decision is expected soon.

Pressure on currency

“Redeemable preferred shares have already been used by some private companies,” said Conrado Stievani, a capital markets partner at law firm BMA.

He noted that this strategy not only helps companies avoid draining cash or increasing debt but could also ease pressure on the exchange rate this month. That’s because a significant share of these companies’ stock is held by foreign investors, who would repatriate the funds if dividends were paid in cash.

By paying dividends in redeemable preferred shares, companies can stagger the redemption, essentially converting the shares to cash, over the coming years.

This approach has already been taken by Axia (formerly Eletrobras), which announced around R$40 billion in retained earnings this year and opted to pay shareholders in redeemable preferred shares. These can be redeemed in future years, without triggering income tax. Axia, currently listed on B3’s Level 1 governance segment, which allows preferred shares, plans to migrate to Novo Mercado.

Stievani added that his firm has seen this structure increasingly adopted by privately held companies. Publicly listed firms are also exploring other options, especially those with large foreign investor bases.

One such strategy is to launch follow-on offerings and extend dividend rights to new investors participating in the offering. “In those cases, the company aligns the right to receive dividends with the new shareholders,” he explained, noting that companies with strong stock performance are particularly interested.

He said the more conservative companies are likely to announce the dividend and complete the offering still this year, despite the shortened capital markets calendar in December. Others may announce now but execute the offering next year.

Erickson Oliveira, a partner at law firm Levy Salomão, said the pace of dividend announcements reflects a split between more conservative companies, with available cash, and others. “Our advice is that companies stick to their plans and act as if the law hasn’t changed, given the tight deadlines,” he said.

Thiago José da Silva, a corporate law partner at Pinheiro Neto Advogados, agreed. He recommends companies declare dividends on profits accumulated through the end of September, based on their third-quarter results, and pay them if cash is available. “That way, they protect as much of the retained earnings as possible,” he said.

For profits from the last quarter of the year, companies must wait until their annual financial statements are released next year. Silva said companies are exploring alternative solutions in cases where the profit reserve doesn’t match available cash

*By Fernanda Guimarães — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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