* Declaration prompted by sulfuric acid plant accident
* Vale was raising output at New Caledonia nickel project
* Company seeks to become No. 1 nickel producer in 2012
* Vale's Goro nickel mine seen becoming world's largest
SAO PAULO, May 10 Vale, the world's
second-biggest nickel producer, said on Thursday it would
suspend sales and purchase agreements at its Goro project on the
French Pacific island of New Caledonia after an accident at the
mine's sulfuric acid plant.
Rio de Janeiro-based Vale declared "force majeure" after the
accident, a legal term allowing a company to ignore contractual
obligations when faced with events outside of its control.
The declaration affects shipments to a single Vale client
and shipments from a group of suppliers, Vale said.
No one was hurt and no ecological damage resulted from the
accident, the company said. Sulfuric acid is used in the
high-pressure acid-leaching process of refining nickel ore.
The company is evaluating the conditions at the plant and
will only be able to give additional information when that
evaluation is complete, Vale said.
The Goro project, which is expected to become the world's
largest nickel mine, is designed to produce as much as 60,000
tonnes a year of nickel and 4,600 tonnes of cobalt a year.
The project's output would then be 3.5 percent of estimated
global output of about 1.7 million tonnes of nickel this year.
Vale is counting on the mine, and new production at nickel
mines in Canada, Brazil and Indonesia, to help it overtake
Russia's GMK Norilsk Nickel as the world's largest nickel
producer, Chief Financial Officer Tito Martins said earlier this
Vale began ramping up output at Goro in the fourth quarter
and produced 4,000 tonnes of nickel in the first three months of
2012, Vale said.
Goro's start-up was delayed several years and costs soared
to more than $4 billion from $1.9 billion, after protests by
local islanders raised environmental concerns and soaring
commodities prices boosted equipment and engineering costs.
Nickel is primarily used to make steel harder and
rust-resistant and is a product, along with iron ore and coking
coal, that Vale sells to steelmakers.
Nickel for delivery in three months was little
changed, falling 0.17 percent to $17,165 a tonne in London
trading on Thursday.
Cobalt is used in the preparation of magnetic, high-strength
metal alloys and is one of the main byproducts of nickel mining.