After 16 Years, Vale’s Big Nickel Bet Is Looking Like a Winner – by Mariana Durao and James Attwood (Bloomberg News – March 8, 2022)

(Bloomberg) — An unprecedented surge in nickel prices fueled by the war in Ukraine is turning a once-sputtering portfolio of mines into prized assets.

In the heady days of the 2000s commodities supercycle, Brazilian iron ore giant Vale SA made a $17 billion bet on a metal used mainly to make stainless steel. The purchase of Canadian nickel miner Inco Ltd., announced in 2006, was part of then-CEO Roger Agnelli’s goal of turning Vale into a diversified global heavyweight at a time of seemingly insatiable Chinese demand for raw materials.

As the nickel bull run turned into a stampede in early 2007, Agnelli’s aggressive outbidding of rivals for Inco’s sprawling deposits in Canada, Brazil, Indonesia and New Caledonia looked like a stroke of genius. But then prices crashed and the foray into nickel quickly become an albatross around Vale’s neck.

“It was a midsummer night’s dream,” Jose Carlos Martins, a former senior executive at Vale, said in an interview Tuesday. “Prices retreated and were running closer to the cost of production for years.”

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