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Vale ’s (NYSE : VALE) companywide nickel production in the second quarter of 2014 was 61,600 tonnes, an 8.6% drop from the first quarter and 5.3% fall from the year-ago period. Vale says the decline mainly reflects the impact of four weeks of planned maintenance work carried out on the acid plant and furnaces in Sudbury, Ont. For the first half of 2014, Vale’s companywide nickel output was only off 0.7% to 129,200 tonnes.
Vale’s Sudbury operations produced 9,100 tonnes nickel in the second quarter, a decline of 48.4% from the first quarter and 49.2% from the second quarter of 2013. For the first half of 2014, Vale produced 26,800 tonnes nickel in Sudbury, off 23.6% from the 35,000 tonnes produced in the first half of 2013.
(Elsewhere in Canada in the second quarter, Vale produced 6,900 tonnes in Thompson, Man., or up 11% year-over-year; and 12,100 tonnes at Voisey’s Bay, Labrador, down -19.7%.)
The low point of the quarter came on April 6, when millwright Paul Rochette was killed at Sudbury’s Copper Cliff smelter complex. The United Steelworkers Local 6500 and Vale carried out a joint investigation into the fatality.
According to the Sudbury Star, Rochette, 36, and another millwright, a 28-year-old man, were found by their superintendent early in their shift in the casting and crushing area, between the smelter and matte processing areas.
The Star said the men were “unconscious and appeared to have been injured by a moil or large piston that broke under pressure as it was crushing copper-nickel ingots. Rochette died of severe head trauma and the younger man suffered a concussion and facial lacerations…” and was hospitalized.
The Sudbury smelter remained closed during the fatality investigation, restricting feed to nickel refineries at Copper Cliff in Sudbury and Clydach, Wales. The smelter was then reopened and then closed again for the four-week maintenance period, which is needed every 18 months.
Operationally, Vale emphasized that while it was its surface facilities in Sudbury that were undergoing maintenance in the second quarter, its still describes its mining operations as the “bottleneck of the Sudbury system”. However, it notes its Sudbury mines continued to produce during the maintenance period, which allowed for inventories of ore and concentrate to be built up for processing in the second half of the year.
Thus, Vale expects stronger refined nickel output at Sudbury to finish the year.
Vale’s Sudbury operations continue to have a substantial by-product output of precious metals. In the second quarter, they totalled 18,100 oz. gold (down 14% year over year), 27,000 oz. platinum (-17.6%), 66,500 oz. palladium (-17.4%), 269,000 oz. silver (-50.9%), plus 113 tonnes cobalt (-60.6%).
Vale’s platinum group metals production from Sudbury brought in US$115 million in revenue in the second quarter, down 26.3% from the first quarter of 2014 but up 9.5% from the second quarter of 2013.
During the third quarter, Sudbury will temporarily be getting more nickel concentrate from the Voisey’s Bay mine, as its usual destination — Thompson — undergoes a similar annual planned maintenance period.
During a conference call to discuss the second quarter, analyst Amos Fletcher from Barclays asked Vale management about whether there was any progress in discussions with Glencore Xtrata to achieve operational savings by working together in the Sudbury basin — potential synergies that in 2006 were pegged at US$550 million.
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