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Vale to put New Caledonia nickel plant on care & maintenance as buyer pulls out

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Vale to put New Caledonia nickel plant on care & maintenance as buyer pulls out

Highlights

Vale may shut VNC if no sustainable solution found

VNC's Goro operation dogged by environmental protest, refinery issues

  • Author
  • Diana Kinch
  • Editor
  • Daniel Lalor
  • Commodity
  • Metals

London — Brazilian miner Vale said it will start to place its New Caledonia nickel and cobalt operation on care and maintenance with a view to a possible shutdown, after it failed to agree terms to sell the operation to New Century Resources Ltd. (NCZ).

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Vale Canada Ltd (VCL) has been unable to reach an agreement with NCZ to acquire its 95% stake in Vale Nouvelle Caledonie S.A.S. (VNC), Vale said late Sept. 7.

That ended an exclusivity period with NCZ that was announced on May 25 and extended on July 28 until Sept. 8.

"The initial search for potential purchasers for VNC followed a robust and competitive process that involved an extensive analysis of expertise and capacity as well as a commitment to upholding VNC's social and environmental obligations," Vale said.

Vale, the world's largest nickel producer, with operations in Brazil, Canada and Indonesia as well as the southwest Pacific territory of New Caledonia, produced 208,000 mt of finished nickel in 2019.

It had held negotiations on a potential sale of VNC with Chinese parties before embarking on exclusive negotiations with NCZ.

Now, however, all the alternatives being considered for VNC's viable future contemplate Vale's exit from the operation, Vale CEO Eduardo Bartolomeo said in a statement.

"Vale will now start the required steps to place VNC on care and maintenance, in preparation for a possible shutdown of the operation, should no sustainable solution be found in the coming months. At the same time, the company is continuing efforts with the French State, the South Province of New Caledonia and VNC management to achieve a positive outcome for the future for the operations," the company said.

Funding issue

NCZ, which operates the Century zinc mine in Queensland, said Sept. 8 that negotiations with different stakeholders had failed to generate a funding package and equity structure for VNC which would adequately accommodate a suitable risk or reward scenario for New Century's shareholders.

NCZ had reportedly been seeking funding of at least $900 million in equity and debt contributions to fund a simplification plan and general working capital of the VNC operation.

VNC has been dogged by environmental protest and refinery issues since its Goro nickel and cobalt mine started up in 2011.

Its processing plant is designed to produce up to 57,000 mt a year of nickel. The on-site refinery was designed to produce an 80/20 split of nickel oxide and a mixed hydroxide product, with cobalt produced as cobalt carbonate and in the mixed hydroxide.

Nickel production at the site last year was 23,400 mt, down from 32,500 mt in 2018.

S&P Global Platts reported earlier this year that a project was under way to convert Goro to a low-impurity limonite-only feed, decommission the refinery and switch to a 100% mixed hydroxide product.