MELBOURNE (Reuters) - Brazil’s Vale is reassessing its loss-making New Caledonian nickel operations as part of a wider review of low performing assets after new Chief Executive Fabio Schvartsman took charge last month, a spokesman said.
“Under the leadership of our new CEO, Vale is reviewing all assets and operations, with low-performing assets an area of particular focus. Vale New Caledonia is part of that review,” spokesman Cory McPhee told Reuters by email.
“The nickel price today is languishing at around $9,000 a tonne with no indication of recovery in the near-term. This has forced us to reassess all areas of the nickel business, including our operations in New Caledonia, which continue to lose money at these prices.”
Schvartsman has set up working groups to assess each of the business units at Vale, the world’s biggest iron ore miner, and a report is expected within two months, according to analysts.
Global nickel miners are coming under renewed pressure to cut costs or close capacity as a flood of cheap ore enters the market, and Vale has already said it plans to suspend two of its older high-cost Canadian mines this year.
Indonesia and the Philippines are ramping up shipments after Indonesia relaxed an ore export ban earlier this year and a hardline Filipino environmentalist was ousted from the country’s mining ministry.
LME nickel reached a one-year trough of $8,680 last month and has since recovered to around $9300.
Vale has said that it is aiming to cut cash costs to $10,500 to $11,000 a tonne at its New Caledonia operations in the second half, as it ramps up production and prices of byproduct cobalt soar.
France in November gave a 200 million euros ($227 million) state loan to Vale’s New Caledonia unit to help it cope with pressure on nickel prices.
($1 = 0.8794 euros)
Reporting by Melanie Burton; Editing by Richard Pullin