One of the principal objectives, they said, was to improve nickel operations by reducing costs and improving productivity.

VNC is the company’s nickel operation in the Melanesian country of New Caledonia, north-east of Australia. It is already undergoing a complete restructuring process, chief financial officer Luciano Siani said.

There will be further news regarding this asset soon, he added, but capacity and cost improvements must be made first.

Vale was previously willing to sell or even close VNC because of output instabilities and accumulated losses, but has now decided to revamp it before taking any further action.

The plant has capacity for 60,000 tonnes per year of nickel but output in January-September 2018 was equivalent to a run rate of only 32,270 tpy.

“This is what we’re doing before deciding whether to keep VNC in our portfolio,” Siani added.

This transformation was being done under the guidance of Eduardo Bartolomeo, who was brought back to Vale this year by chief executive officer Fabio Schvartsman to lead base metals operations, after six years pursuing other opportunities.

Bartolomeo said during the earnings call that while the changes will take some time, he expected to be leading a “brand new” division by 2020.

“We also have to adapt ourselves to the new size of our operations, which has eliminated some refineries,” Bartolomeo said. “If you think about 60,000 tonnes per year [of nickel produced by VNC] and a price of $18,000-20,000 per tonne in 2020, you will understand the opportunities.”

The benchmark three-month price for nickel on the London Metal Exchange was $12,210-12,220 per tonne on October 25. This was down by 1.41% from $12,385-12,400 per tonne on Wednesday.

Bartolomeo believed that Vale will be able to achieve its nameplate capacity for 310,000 tpy of nickel by 2021-22, but this will depend on market fundamentals.

Vale’s executives also commented during the call on Salobo 3, a new expansion to its copper mine located in Brazil.

As indicated by its name, this will be the third concentration unit at the plant. It will have capacity for 50,000 tpy for the first five years, 42,000 tpy in ten years’ time and 33,000 tpy over its whole life cycle. This means that Salobo’s lifespan will be reduced and that it will be depleted in 2052, from a previous expectation of end-of-life in 2067.

The expansion will start-up in the first half of 2022, and the investment required has been estimated at $1.1 billion.

“[Salobo 3] is a twin plant in comparison to the other two,” Bartolomeo said. “We expect a slight increase in the cash cost of Salobo because of [the early] depletion, but this should be close to what we’re seeing [for the whole complex] right now.”