General Motors (NYSE: GM) has considered purchasing a stake in Brazilian miner Vale SA’s base metals segment, which mines and processes nickel and other metals used in the production of electric car batteries.
Vale announced in December that it would consider selling up to 10% of its stake in the company, without specifying a price. According to some sources, a stake of that size may be worth up to $2 billion.
According to persons familiar with the situation, the selling process is in its early stages and Vale’s potential equity sale has attracted some of the world’s largest sovereign-wealth and pension funds, notably from the Middle East and North America.
Vale is said to be separating its base metal assets from its iron ore operations and hopes to announce a strategic partner for the new firm in the first half of 2023. The Rio de Jainero-based miner is also already a direct nickel supplier for Tesla batteries.
Global automakers are rushing to secure enough battery resources to satisfy their electric-vehicle sales ambitions in the coming years. GM has been one of the most active automakers in seeking supply partnerships and investing in firms to assure a future supply of EV batteries and critical materials such as lithium, nickel, and graphite.
The Detroit-based automaker announced last week that it intends to invest $650 million in Lithium Americas as part of its proposal to jointly establish a massive lithium mine in Nevada.
In November, GM also agreed to a long-term supply contract for nickel sulfate manufactured at Vale’s factory in Québec with a Canadian affiliate of Vale. The substance, according to GM, will be used in battery cathodes to power the automaker’s increasing line of electric vehicles, supplying enough nickel to create approximately 350,000 EVs per year.
Vale has set an aggressive target of raising annual nickel production from 180 kilotonnes in 2022 to more than 300 kilotonnes by 2030. It plans to more than increase its copper production from 260 kilotonnes this year to 900 by 2030, which will require an expenditure of $20 billion.
GM last traded at $42.85 on the NYSE.
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