BASE METALS

Vale pushes for nickel turnaround

Brazil’s Vale SA (BZ: VALE3), already the world’s largest nickel producer, is pushing to turnaround its nickel business to keep up with the anticipated electric car revolution.

Staff reporter
CEO Fabio Schvartsman at the investor day at the NYSE

CEO Fabio Schvartsman at the investor day at the NYSE

At a wide-ranging investor day in New York this week, Vale announced a nickel exploration joint venture with Glencore, flagged a limited Samarco restart in 2020 and said it was investing US$2.9 billion in the next five years to reach a 95% share of premium products.

Vale said it had reached an agreement with Glencore to jointly explore Vale's Victor orebody and Glencore's Nickel Rim South mine in Canada.

CEO Fabio Schvartsman also said Vale would invest $500 million from 2019 to 2022 in its New Caledonia nickel mine "on our own" - an operation where it had previously been seeking a partner.

He said the most important issue was the challenge in base metals.

"Because Vale firmly believes there will be a growth in the demand for nickel for batteries given the EV revolution and we want to have our operation ready to deliver what is expected, when and if this revolution happens," he told reporters at the investor day press conference.

He also said the Samarco iron ore operation in Brazil, a joint venture with BHP that has been shuttered since November 2015's deadly tailings dam failure, would restart on a limited basis in 2020 and was expected to start generating cash in 2023.

"We are going to start at one-third of former capacity of Samarco … and the ramp-up will have to be very slow," Schvartsman said.

In iron ore, the company is planning to expand S11D to 100 million tonnes and Northern System logistics to 240Mt, with a capex of $770 million and an expected start-up in 2022.

Vale also intends to deliver more dividends and said excess cash would be allocated among extraordinary dividends, buybacks, bolt-on acquisitions and financial flexibility.

"We are going to generate lot of free cash flow," Schvartsman said.

Vale shares were off slightly in Brazil yesterday but are up 31.35% year-to-date, given the company a market capitalisation of about $72 billion.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.

editions

Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.