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TORONTO — Reuters – Vale to consider base metals IPO only if nickel rallies – by Sarah McFarlane and Eric Onstad (Reuters U.K. – December 5, 2014)
LONDON – (Reuters) – A possible public listing of a stake in the base metals unit of Brazil’s Vale SA (VALE5.SA) hinges on a rally in nickel prices of around 20 percent, its chief financial officer said on Friday.
“We want to see nickel prices above $20,000 per tonne in order to consider such an option, I would say well above,” Luciano Siani said in an interview with Reuters.
Earlier this week Vale, the world’s largest producer of iron ore, said it was considering an initial public offering of 30 to 40 percent of its base metals division, because the unit was undervalued by the market. Benchmark nickel CMNI3 on the London Metal Exchange closed at $16,825 a tonne on Friday after a roller-coaster ride this year.
Siani said that if nickel prices reached $21,000 per tonne and copper $6,600 per tonne next year, the company would meet the lower end of its 2015 target for the base metals unit of $4 billion to $6 billion in earnings before interest, tax, depreciation and amortisation (EBITDA).
If copper and nickel reach those levels, the unit would be worth $30 billion to $35 billion, he estimated. If the price increases do not materialize, the IPO is not an option, he added.
“If the (nickel) prices don’t rise, we will not be doing it, definitely not at today’s levels. It would not be a possibility.”
Nickel prices soared by over 50 percent earlier in the year to a 27-month peak of $21,625 a tonne in May.
For the original source of this article, click here: http://uk.reuters.com/article/2014/12/05/uk-vale-base-metals-ipo-idUKKCN0JJ1ZN20141205