We’re used to hearing forecasts, results and updates from Brazil’s Vale about its iron ore business – one of the top three in the world along with Rio Tinto and BHP.
But it is also a major nickel and copper producer, especially from the old Inco mines in Canada, with other operations in Indonesia.
In the past year or so, Vale has struggled to make a go of its nickel and copper businesses – a bitter two-month strike in Canada in 2021 impacted output and morale which only now seems to be improving after employees signed up to a new five year agreement.
This week the company upgraded its outlook for copper and nickel thanks to the rapid growth in renewables and especially batteries, reversing a downgrade made only a few months ago.
Now it is more confident – a bit like BHP was five years ago when it decided to get serious about nickel and lucked into the emerging renewables boom.
Vale said on Wednesday it sees global demand for nickel increasing 44% by 2030, due to high demand for use in batteries that power electric vehicles.
Demand for nickel is forecast to increase rapidly this decade with the energy transition,” the company said in a statement, adding that the new demand forecast would be around 6.2 million tonnes of metal a year.
Vale is a much bigger nickel producer than BHP, one of the largest in the world in fact – its annual production is more than twice BHP’s 76,800 tonnes in the year to June.
Vale says it now expects to produce around 190,000 tonnes of nickel metal this year (Vale has a calendar year) and sees that rising to between 230,000 and 245,000 in several years’ time.
That’s up from a forecast in May for 200,000-220,000 tonnes, with the difference coming from additional growth through its Indonesian ventures.
In the longer term, Vale reckons it can boost nickel output to more than 300,000 tonnes (the long term wasn’t defined).
Growth in nickel supplies should be driven mainly by Indonesia and then Canada, where the company has operations, as well as Australia where BHP and IGO have plans to expand output, and the emerging Gonneville project of Chalice Mining near Perth which will end up as the largest nickel mine in this country by the end of this decade (see separate story).
Global demand for copper – also used in vehicle batteries and renewable energy systems – is also expected to rise by about 20% by 2030 to 37 million tonnes, Vale forecast.
The medium-term forecast for Vale’s copper is seen at between 390,000 and 420,000 tonnes per year, versus up to 285,000 tonnes forecast for 2022
(BHP and Rio Tinto are much larger producers than Vale – BHP produces more than 1.5 million tonnes a year, Rio Tinto about 494,000 tonnes).
Vale did not predict that supply would catch up with demand, projecting in the medium and long-term a “structural deficit” of copper.
“Increased demand, coupled with a lack of supply, will attract significant interest across the sector,” it said.
Vale has been looking into options for its base-metals operations, such as a spin-off or a merger. There was no announcement this week.
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To this end, Vale earlier this week revealed a $US2.1 billion expansion of its Indonesian nickel processing business.
Vale’s Indonesian arm signed a deal with China’s Shandong Xinhai Technology Co. Ltd and a unit of China Baowu Steel Group (the world’s largest steel maker) to develop a processing plant on Sulawesi Island.
Vale said the project would cost around $US2.1 billion and come on line in 2025.
Under the deal, the companies will form a joint venture firm, with Vale controlling 49% of the stake. Shandong Xinhai and Baowu, through its subsidiary Taiyuan Iron & Steel Co. Ltd (TISCO), would together control 51%.
The project would produce ferronickel with 73,000 tonnes to 80,000 tonnes of nickel content a year, he said.
In another area of Sulawesi Island, Reuters reported that Vale and its partners (Ford Motor Co and China’s Huayou Cobalt) are developing a plant to produce 120,000 tonnes per annum of mixed hydroxide precipitate, material extracted from nickel ore that would be used in batteries for electric vehicles.
The green metals boom continues.
