Vale and Glencore planning copper joint venture

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.