Saudi Arabia’s sovereign wealth fund and state miner Ma’aden signed a pact to form a company solely for investing in mining assets internationally. The firm is slated to be infused with as much as 11.95 billion riyals ($3.2 billion), according to a statement on Wednesday.
As a non-operating partner with minority equity stakes, the new company will invest in iron ore, copper, nickel, and lithium. It will also strive to sign supply contracts with the enterprises and mines in which it invests.
“The fund will be used to take equity positions in existing assets or existing companies that can provide the offtake metal we need for development in the kingdom,” Ma’aden CEO Robert Wilt said in an interview in Riyadh.
Ma’aden will control 51%, with the rest held by the $620 billion Public Investment Fund (PIF). With a 67% stake, the PIF is also the state miner’s largest stakeholder.
Wilt stated that the corporation plans to complete two to three purchases this year, spending approximately $3 billion in the process.
The co-investment move coincides with Ma’aden signing an agreement with Ivanhoe Electric (NYSE America: IE), with the Saudi Arabian miner taking “a strategic 9.9% equity stake” in the US-listed mineral exploration and development company. The investment is roughly valued at $126.4 million.
“50% of the investment value will be deployed back into the Kingdom as part of a 50:50 joint venture,” the miner said, adding that it would have access to Ivanhoe’s proprietary technology which conducts geophysical surveys using high powered transmitters to detect key elements such as copper, nickel, gold and silver.
Ma’aden also inked new joint venture agreements with Barrick Gold (NYSE: GOLD) for two prospective exploration projects comprising the Jabal Sayid South and Umm Ad Damar license areas. These additional potential joint ventures significantly increase Barrick’s exploration footprint in Saudi Arabia and strengthen the Ma’aden-Barrick collaboration.
The synergy of the two firms is also expected to open the door to possible synergies with the nearby Jabal Sayid mine, a current 50/50 joint venture between Barrick and Ma’aden.
These announcements come on the heels of Ma’aden curtailing output at the aluminum smelter it co-owns with Alcoa Corp. due to operational issues. The miner shut down some of its potlines to address quality-control issues and stabilize the operation, Wilt said in an interview on Wednesday. He mentioned “high anode effects,” which can degrade aluminum grade by introducing undesirable contaminants.
“I don’t anticipate it affecting our budget,” Wilt said, adding that no customers will be affected but declined to provide the scope of the production cut and its impact.
The Saudi Arabia sovereign fund has been linked recently to wrestling promotion WWE amid the return of its founder Vincent McMahon as executive chairman. The latter is rumored to have been working on a deal to sell the company to PIF, most especially after his daughter, Stephanie McMahon, stepped down as co-CEO and executive chairman.
Information for this briefing was found via Bloomberg, Mining.com, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.