RIO DE JANEIRO, Nov 7 (Reuters) - Brazil’s Vale confirmed that it is in talks with Glencore Xstrata over potential cooperation between the mining groups’ nickel operations in Canada’s Sudbury basin, in an effort to cut costs as prices languish.
Vale said on Thursday it was not planning “a corporate joint venture” in Sudbury, but was looking at other options to join forces and save cash. Nickel prices have fallen by around a fifth since January to around four-year lows, weighed down by over-supply.
“We are looking at ways to create synergies for our non-ferrous operations,” Peter Poppinga, Vale’s head of non-ferrous metals, told analysts on a quarterly earnings call.
Reuters reported last month that Glencore and Vale had revived talks over long-debated cooperation in Sudbury, with the companies considering a number of options for their mining and processing operations in the area. Sources familiar with the situation said then that talks were at an early stage.
The two main operators in Sudbury have held talks on joining forces on more than one occasion before, both as Inco and Falconbridge and, later, as successor companies Vale and Xstrata. Analysts have long said a tie-up would make sense for two operators mining the 60 km-long, oval-shaped formation known as the Sudbury basin.
The sources had said a tough nickel market, pressure on Vale over nickel difficulties at its Goro nickel-cobalt mine in New Caledonia and elsewhere could make a deal more likely this time than in the past. Equally, the problems across Vale’s nickel division could prove distracting.
Vale said on Thursday it did not expect to have to take a writedown on the value of Goro.