Vale to invest $500mln in New Caledonia nickel operations – Schvartsman

Brazilian miner Vale will be investing an additional $500 million in VNC, its nickel operations in the South Pacific country of New Caledonia on expectations of increased demand from rising electric vehicle (EV) output, chief executive officer Fabio Schvartsman said on Tuesday December 4.

The executive also announced during the annual investor presentation in the New York Stock Exchange an agreement with Glencore to explore two deposits in Sudbury, Canada. This deal includes Victor orebody, owned by Vale, and Glencore’s Nickel Rim South, he added.

“There’s a clear challenge in [Vale’s] base metals [division],” Schvartsman said. “Our commitment and focus are on delivering for the division, bringing it to the same standards as the iron ore operations.”

Vale is the world’s largest iron ore and nickel producer. The company has been looking to sell or jointly develop VNC since early 2016 but had failed to find a partner.

The miner’s assumption for these nickel projects is that EV production will reach 14 million units by 2025, from 1.8 million units in 2018. That would demand more than 500,000 tonnes of additional high-quality nickel in the market until 2025, according to Schvartsman, as the company believes NCM 811 batteries will be standard.

NCM batteries are comprised of nickel, cobalt and manganese with an 80-10-10 percentage breakdown. This type of cathode will be the second-most used in the industry by 2025, investment bank UBS estimates.

Fastmarkets assessed the European nickel briquettes premium over London Metal Exchange prices at $235-265 per tonne in-warehouse Rotterdam on Tuesday December 4, unchanged from $235-265 per tonne the week before.

The domestic Chinese price assessment by Fastmarkets for nickel sulfate, 21-22.5%, delivered, was 24,200-24,700 yuan ($3,535-3,608) per tonne ex-works on Tuesday, stable from November 27.

The market needed an additional 73,000 tonnes per year of nickel supply during the 2011-2016 period, Vale’s base metals director Eduardo Bartolomeo said. This annual demand growth could be 100,000 tpy in 2017-2023 and 195,000 tpy in 2024-2030, he added.

The company estimates its nickel output at 244,000 tonnes in 2019, rising to 320,000 tonnes by 2023, according to Bartolomeo. It is possible to reach 313,000 tonnes in the short term and 400,000 tonnes in the medium term, however, with marginal investments, he said.

“We have always said we would be able to bring these volumes to the market when the time arrived,” Bartolomeo said. “We have the best resources in the world in Indonesia.”

The base metals director also indicated eight new copper operations that Vale will be launching in the long term. There are opportunities in Brazil (Salobo, Sossego, Cristalino, Alemão), Canada (Sudbury with the Victor project) and Indonesia (Hu’u), he added.

The Brazilian miner expects to produce 420,000 tonnes of copper in 2018. The forecasts for the following years are 417,000 tonnes in 2019; 421,000 tonnes in 2020; 436,000 tonnes in 2021; 470,000 tonnes in 2022; and 500,000 tonnes in 2023.

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