NEW YORK (Reuters) – Brazilian miner Vale SA (VALE3.SA), the world’s top nickel producer, plans to invest $500 million in its struggling New Caledonia nickel mine on its own after previously vowing to find a partner for the venture.
Vale’s decision to invest in the project alone, from 2019 to 2022, reflects the company’s new understanding of the importance of an expected surge in electric vehicle (EV) sales, Chief Executive Fabio Schvartsman said on Tuesday.
“The decision to continue on our own was made because (New Caledonia) could be a very important part of strategy to supply nickel especially given the EV revolution,” he told journalists after Vale’s investor day presentation in New York. “We thought initially that we could have a partner but it was in a moment when we had no clarity on the incoming EV revolution.”
Nickel CMNI3, a key input for most types of lithium-ion batteries, including those used in electric cars, hit multi-month lows last week as demand worries escalated on Chinese steel price weakness and U.S.-Sino trade tensions.
Over-budget and years late when it started up in 2010, the New Caledonia project, located on a Pacific island, accumulated nearly $1.3 billion in losses from 2014 to 2016. The operation’s woes stand in contrast to Vale’s main iron ore business, which has been churning out cash in recent quarters thanks to improving prices and robust demand from China.