The Potential Impact Of Easing Indonesian Nickel Export Restrictions On Vale – by Trefis Team (forbes Magazine – June 23, 2015)

Vale is a diversified mining company and the world’s largest iron ore producer. Though iron ore sales account for a majority of the company’s revenues, Vale also has interests in the mining of base metals, particularly copper and nickel. Vale is among the world’s largest producers of nickel, and prices of the metal can have a significant impact upon the company’s stock price.

Nickel is mainly used in the production of stainless steel. With demand for stainless steel mainly correlated with industrial activity, prices of the metal have suffered due to weakness in Chinese economic growth.

However, there is a chance of a sharper fall in nickel prices, if the Indonesian government revokes a ban on unprocessed nickel exports instituted in 2014. The Indonesian government had banned unprocessed mineral exports in January, in order to boost domestic mineral processing capacity. Though the country relaxed restrictions on exports of copper, the ban on unprocessed nickel and aluminum exports still remains.

With the Indonesian government considering a relaxation of export restrictions on bauxite, which is the precursor for aluminum production, there is a chance that the Indonesian government may also consider relaxing restrictions on unprocessed nickel exports. In this article, we will take a look at the impact of this scenario on Vale’s stock price.

The Impact of Easing of Indonesian Nickel Export Restrictions on Vale

Indonesia was the world’s largest producer of mined nickel ore in 2013, accounting for 440,000 tons, or nearly one-sixth of global nickel mine production. With the imposition of the ban on nickel exports, Indonesia’s share of global nickel production declined to around 10% in 2014.

For the rest of this article, click here: