Photographer: Ron D'Raine/Bloomberg
Vale Receives Bids for Stake in New Caledonia Nickel BusinessBy and
Brazilian miner seeking a partner to share investment burden
Company may now be looking to sell smaller stake, person says
Vale SA has received offers to buy a stake in its New Caledonia nickel business as Chief Executive Officer Fabio Schvartsman looks to overhaul underperforming assets.
The Rio de Janeiro-based company is seeking a partner at one of the world’s biggest nickel operations to help finance investments in the remote Pacific island such as a new tailings dam. Known as VNC, the complex has been dogged by technical difficulties and high costs.
“We have just received proposals from bidders,” Vale said in an emailed response to questions. “The process continues.”
Nickel prices have surged 38 percent in the past six months, the most among major metals, as investors target commodities that will benefit from a boom in rechargeable-battery demand. In marketing VNC, Vale had been targeting companies in the battery supply chain such as China’s Gem Co., according to a person with direct knowledge of the process.
Talks with Gem Co. to buy about 25 percent to 30 percent of VNC have stalled and Vale may now be looking to sell a smaller stake, possibly as part of a streaming or off-take arrangement with a trader or end user, the person said, asking not to be identified because the information is private.
In its emailed response, Vale didn’t identify the bidders and had no comment when asked about talks with Gem Co. The Chinese company didn’t respond to requests for comment.
While nickel prices have advanced this year, they are still about 75 percent below a 2007 peak.
With Vale striving to ease a $21 billion debt load, management is reviewing its least profitable assets. The company has signaled it will consider shutting VNC if the partner search fails, a move that would be resisted by authorities in New Caledonia, which is a special collectivity of France.
Last year, VNC churned out a record 34,300 metric tons. Nickel accounts for about 90 percent of the island’s exports and one in five private-sector jobs, according to a report on the New Caledonian economy.
— With assistance by Mark Burton, Martin Ritchie, and Winnie Zhu