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Nickel

Vale base-metals IPO could prove to be a Bay Street bonanza – by Euan Rocha and John Tilak (Globe and Mail – December 4, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

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).

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Nickel prices should increase, economist says – by Mary Katherine Keown (Sudbury Star – December 5, 2014)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

The grey wintry skies mirror the global economic outlook for 2015-16, says one of Canada’s foremost economists. But the local economy should inch upwards over the next two years.

Derek Burleton, vice president and deputy chief economist for the TD Bank Group, spoke to Greater Sudbury’s business community on Thursday at a luncheon hosted by the Chamber of Commerce.

“I’m not expecting any major improvements in the year ahead,” Burleton said of the global economic outlook for 2015. Specifically, he pointed to Japan and the Eurozone, indicating the latter would have to make some “difficult decisions over the next year.”

There is good news for this city, however, as the price of nickel is expected to climb, but not as a result of increased demand.

“The big story here is that it’s a supply story; the export ban of ore in Indonesia will lead to a supply deficit in 2015. That’s what’s being priced into the market,” Burleton told the crowd assembled at Ristorante Verdicchio.

He projected nickel prices would near $15 per pound; however, a forecast published by TD in September put that projection at a more modest $10.44 per pound by 2016. Burleton noted he is “not as optimistic on copper; it’s pretty low and flat,” due to an excess of the mineral flooding the market.

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Vale eyes possible return of ‘Inco’ to Canadian market as it mulls IPO for part of base metals unit – by Peter Koven (National Post – December 3, 2014)

The National Post is Canada’s second largest national paper.

TORONTO – Eight years after it disappeared, Inco Ltd. could be poised to return to the public markets in some form.

Brazilian mining giant Vale SA, which paid nearly $20-billion for Inco in 2006, said Tuesday it may sell part of its base metals unit in an initial public offering, likely on the Toronto Stock Exchange. That confirmed an earlier report from Reuters, and follows years of speculation that Vale could divest the business.

There are two logical reasons to consider it now. First, Vale wants liquidity as it plans a huge capital spending program next year amid low iron ore prices. More important, these assets are completely lost inside the huge Brazilian company.

“We believe there’s hidden value there,” chief executive Murilo Ferreira said in a press conference in New York. “We believe this value has to be better expressed.”

Vale calls itself a diversified mining company, but the vast majority of its profits come from iron ore. Even with iron ore prices plunging this year, that one commodity made up 80% of the company’s adjusted pre-tax earnings in the third quarter. It accounted for 97% of adjusted earnings in the same quarter a year ago, when prices were much higher.

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Vale Says Base Metals Unit May Be Worth Up to $35 Billion – by Juan Pablo Spinetto (Bloomberg News – December 2, 2014)

http://www.bloomberg.com/

Vale SA (VALE5), the world’s largest nickel producer, said it may raise cash selling a minority stake in its metals-producing unit worth as much as $35 billion as it faces lower commodity prices.

Chief Financial Officer Luciano Siani said the base metals unit, the company’s largest business after iron ore, may be worth between $30 billion and $35 billion. Vale will only consider selling the stake if the company can get a “fair price,” Chief Executive Officer Murilo Ferreira told investors during a presentation in New York.

“An IPO could be considered,” Siani said in an interview with Betty Liu on Bloomberg Television today. “We want to be ready sooner rather than later to take the opportunity when it presents itself very clearly if that’s the case.”

Vale, whose shares have dropped 43 percent this year, is seeking to move beyond a series of setbacks including strikes in Canada, plant faults in Brazil and an acid spill in New Caledonia. While its earnings outlook was boosted by nickel’s first-half rally, prices have plunged 18 percent from a Sept. 8 peak as Vale increased production.

Nickel output will climb to 303,000 metric tons next year while copper is forecast to rise to 449,000 tons, The Rio de Janeiro-based company said in its annual budget release today.

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The 2015 Metals Outlook Series: Nickel – by Cole Latimer (Australian Mining – December 1, 2014)

http://www.miningaustralia.com.au/home

The story of nickel is finally one of stability.

Since 2005 the me­tal has been wracked by skyrocketing highs and sharp declines that have caused massive job losses and uncertainty that has seen an exodus from the sector by many of the larger players.

Much of this was due to a fall in stainless steel demand, working inversely to the growing demand for construction steel. IBISWorld put it succinctly: “Nickel prices, having reached unprecedented highs prior to the global financial crisis, plummeted as global economic growth slumped in subsequent years.”

And while the future is slated to be better, a swift and strong recovery is not forecast. Earlier this year the metal reached a two year high in May, but since that time has reversed its gains, falling 27 per cent.

Much of this spike was based on Indonesia’s implementation of a ban on unrefined nickel being exported, with prices surging 56 per cent at the time, however the fall came quickly due to the likelihood of current global supply more than meeting the hole left by the Indonesian ban.

BHP’s attempts to sell off its Nickel West assets exemplified the confused nature of the sector. While the miner saw the assets as valuable enough to retain during its greater demerger earlier this year, it did not see them as vital enough to keep within its mix.

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Brazil’s Vale mulling IPO for part of base metals business – sources – by Nicole Mordant and Euan Rocha (Reuters U.S. – December 1, 2014)

http://www.reuters.com/

VANCOUVER/TORONTO – Dec 1 (Reuters) – Brazil’s Vale SA is considering listing part of its global base metals business, two sources with knowledge of the matter said on Monday, as the miner looks to fund capital projects amid a collapse in iron ore prices.

The sources, who asked not to be named as they have not been authorized to discuss the matter publicly, said the world’s top iron ore producer is likely to retain a majority interest in the new entity if it proceeds with the plan.

Vale could outline the plan to list a new entity in Toronto and London as early as Tuesday at an investor day event being held in New York, said one of the sources.

The event at the New York Stock Exchange will be webcast. The second source said there had been significant discussion inside Vale about listing the base metals assets, which have fared better than its iron ore business due to steadier prices.

A Vale spokeswoman in Brazil could not be reached for comment after hours.

Vale’s iron ore business contributed 62 percent of the company’s gross revenue in the third quarter. Outside of iron ore, Vale’s global asset portfolio includes nickel assets in Canada, Indonesia and New Caledonia, coal mines in Australia and Mozambique as well as copper projects in Canada, Brazil and Zambia.

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Lundin finally brings mining back to U.P. Michigan – by Dorothy Kosich (Mineweb.com – November 25, 2014)

http://www.mineweb.com/

The Upper Peninsula of Michigan is home to Lundin Mining’s Eagle mine, the state’s first new mine in decades.

RENO (MINEWEB) – After nearly more than a decade of exploration, permitting and construction, the first U.S. nickel mine has achieved commercial production in the Upper Peninsula of Michigan, a landmark event since most mines in the region were shuttered in the 1960s.

The operation is expected to yield 300 million pounds of nickel and 250 million pounds of copper over an eight-year mine life. The mine began operations on September 23, ahead of schedule and on budget

Roughly 2,000 tons of ore per day can be processed by conventional crushing, grinding and flotation to produce separate nickel and copper concentrates. Shipments of concentrates began earlier this month.

The historic Humboldt Mill, which was built by Cleveland Cliffs for the milling of iron ore in the 1950s and was used to process gold from 1985 to the 1990s by Callahan Mining Company, is being upgraded. Construction and upgrades to the mill began in 2012 and were projected to cost more than US$275 million.

The underground mine is expected to produce about 23,000 tons (20,865 metric tons) of nickel and 20,000 tons (18,143 metric tons) of copper annually.

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Botswana: Diamonds Cannot Solely Sustain Botswana – by (All Africa.com – November 16, 2014)

http://allafrica.com/

Gaborone — President Lt Gen. Seretse Khama Ian Khama says diamonds alone cannot carry Botswana forward.

Delivering his 2014 State-of-the Nation Address on Thursday, November 13, President Khama said to achieve greater economic diversification, the country should continue promoting further beneficiation within the minerals sector.

He said growing global demand for gem diamonds had dovetailed with upward estimates of domestic production based on both the ongoing and anticipated opening of new mines and an extension in the life spans of existing mines through new recovery methods.

Together, he said these developments should ensure that “we will remain a leading global producer over the next three decades until at least 2050.”

With the successful migration of the De Beers Global Sight-holder Sales from London to Gaborone, which was completed ahead of schedule, he said Botswana was already realising its goal of becoming a global ‘mines to market’ hub in the case of diamonds.

To date, he said ten sight-holder sales had been successfully held in Botswana, after the first round of local Diamond Trading Company (DTC) sales that took place in November 2013.

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BHP pulls sale of Nickel West as it finds no buyer – by Barry FitzGerald (The Australian – November 13, 2014)

http://www.theaustralian.com.au/business

BHP Billiton’s simplification drive under chief executive Andrew Mackenzie has hit a snag as it decided to pull the sale of the loss-making Nickel West after failing to secure an acceptable price.

Nickel West, which BHP most wanted to sell off, is the collection of Western Australian nickel assets picked up by BHP with its 2005 acquisition of WMC Resources.

That BHP has not been able to find a buyer is not a complete surprise as the assets were pointedly not good enough to be included in BHP’s spin-off of NewCo, announced in August.

NewCo is a $20 billion company that would join the stock exchange lists next year holding BHP’s other unwanted assets (South American nickel, aluminium, South African coal and manganese) outside of its “four pillars’’ of iron ore, copper, petroleum and coal.

“We believe that Nickel West is neither a good fit with BHP Billiton nor with NewCo,’’ Mr Macknezie said in August. He cited the maturity and complexity of the business as the reasons for not including it in NewCo, or BHP itself.

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Nickel’s Waning Price Boom Leaves BHP With Unwanted Mines – by David Stringer (November 12, 2014)

http://www.bloomberg.com/

The failure to find a buyer for its Australian nickel business has left BHP Billiton Ltd. (BHP) with unwanted smelters and pits after the collapse of a price boom.

The metal reached a two-year high on May 13, a day before the world’s biggest miner outlined a plan to sell all or part of the unit. Since then, the price has declined 27 percent. Nickel West, which includes mines, concentrators, the Kalgoorlie smelter and Kwinana refinery, didn’t attract a suitable bid, the company said today in a statement.

While Glencore Plc (GLEN) Chief Executive Officer Ivan Glasenberg said earlier his company planned to examine Nickel West and would be “kicking its tires,” no acceptable offers were made, BHP said.

The biggest miners have found some units more difficult to divest as they trim portfolios amid lower commodity prices. Rio Tinto Group (RIO), the second-largest, halted work last year to try and sell its diamond unit after failing to find a buyer.

BHP said the nickel unit will remain within the company’s main portfolio, after CEO Andrew Mackenzie signaled it wouldn’t be included in a planned spinoff next year of smaller assets. The division doesn’t fit with either BHP’s core businesses, or operations, which will form the proposed new company, he said in August.

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Nickel West bids fail to find magic number – by Nick Evans (The West Australian – November 12, 2014)

https://au.news.yahoo.com/thewest/

BHP Billiton has shelved the $800 million sale of Nickel West after bids for the struggling unit failed to meet its price expectations.

It remains unclear what the mining giant now plans to do with a business that employs about 1800 people across its mines, concentrators, nickel smelter and refinery.

BHP would not comment yesterday. Chief executive Andrew Mac- kenzie has made clear he does not want to keep the unit, which is part of the proposed NewCo spin-off that will house second-tier assets, including Worsley alumina.

Mr Mackenzie said three months ago that Nickel West was “neither a good fit with BHP Billiton nor with NewCo” and the best outcome was for it to be owned by an operator “much more committed to the nickel business”.

Industry sources said no final bids received over the past fortnight came close to the $500 million to $800 million valuation BHP is said to have initially put on Nickel West.

The failure of suitors to see sufficient value in the business came despite talk that BHP had dramatically revised its price expectations as the sales process dragged on.

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NEWS RELEASE: Duluth Metals Agrees to Acquisition by Antofagasta PLC

TORONTO, Ontario, November 3, 2014 – Duluth Metals Limited (“Duluth”, “Duluth Metals”) (TSX: DM) (TSX:DM.U) today announces that it has entered into a binding agreement (the “Acquisition Agreement”) with Antofagasta PLC (“Antofagasta”) pursuant to which Antofagasta has agreed, subject to the terms of the Acquisition Agreement, to acquire through a wholly owned subsidiary, all of the outstanding common shares of Duluth Metals by way of a friendly take-over bid or a plan of arrangement at a price of CDN$0.45 per share in cash (the “Offer”).

The Offer represents a 284% premium to the 20-day volume weighted average price of Duluth Metals’ common shares on the TSX as at October 31, 2014.

Kelly Osborne, President and CEO of Duluth commented: “We are pleased to reach an agreement with our partner Antofagasta and enter into this acquisition transaction. During a difficult period for the mining industry, Duluth has been able to negotiate a significant premium to the current market share price.”

Antofagasta has also entered into a lockup agreement with all of Duluth’s directors and officers and with Wallbridge Mining Company Limited who collectively own approximately 10.9% of Duluth’s currently outstanding common shares (136,767,985 common shares). In addition, Antofagasta, through its subsidiary, owns approximately 10.4% of Duluth’s common shares

The Acquisition Agreement contains customary deal support provisions, including non-solicitation, superior proposal and right-to-match provisions in favour of Antofagasta and the payment to Antofagasta of a termination fee of CDN$3.5 million if the acquisition is not completed in certain specified circumstances.

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Vale Coming of Age as Nickel Heavyweight as Prices Sink – by Juan Pablo Spinetto (Bloomberg News – October 23, 2014)

http://www.bloomberg.com/

Vale SA (VALE5), whose $18 billion base-metal incursion was beset by a slew of delays and stoppages, is growing nickel output at the fastest pace in six years at a time of tumbling prices for the stainless steel ingredient.

The Rio de Janeiro-based company beat analysts’ estimates to post a 16 percent jump in nickel production in the third quarter, taking total output of the metal this year to 201,400 metric tons. That puts Vale, which plans to produce 289,000 tons of nickel in 2014, on track to challenge top producer OAO GMK Norilsk Nickel, which targets as much as 230,000 tons.

After winning a battle to take over Inco Ltd. in 2006, Vale is leaving behind a series of setbacks including strikes in Canada, plant faults in Brazil and an acid spill in New Caledonia. While its earnings outlook was boosted by nickel’s first-half rally, prices have plunged 24 percent from a Sept. 8 peak and are down about 50 percent since the Inco deal.

“It’s not the best timing in the world,” Marcel Kussaba, an equity analyst at Quantitas, which oversees 16.6 billion reais ($6.6 billion) including Vale shares, said from Porto Alegre, Brazil. “There is the feeling that Vale is starting to deliver when the environment is bad.”

Vale said in its third-quarter production report yesterday that nickel climbed to 72,100 tons, beating a 68,800-ton average forecast by nine analysts surveyed by Bloomberg, the unit’s best performance for a third quarter since 2008, despite a planned maintenance at its Thompson project in Canada.

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BCL’s Norilsk deal the first step in its hunt for nickel – by Allan Seccombe (Business Day Live – October 23, 2014)

http://www.bdlive.co.za/

BOTSWANA’S state-owned BCL, a nickel mining and smelting company, is embarking on a strategy to secure extra sources of metal, and its first step is the $337m purchase of Norilsk Nickel’s African assets.

The transaction, which secures a 50% stake in African Rainbow Minerals’ Nkomati mine in SA and 85% of Tati in Botswana, will be funded out of cash and debt, said BCL’s divisional manager of corporate strategy, Mack William.

BCL has a 1-million-tonne capacity at is smelter and it is currently using about 65%. Taking the Nkomati concentrate will lift the plant to full capacity, Mr William said in an interview.

The Botswana firm used to treat Nkomati’s concentrate, but a few years ago it diverted its concentrate to another smelter, he said.

BCL is undertaking a study at its metallurgical complex to grow capacity at the smelter and better utilise its concentrator, which has capacity for 3-million tonnes of ore a year. “It will position the smelter as the ultimate destination for all nickel concentrate in Southern Africa,” Mr William said.

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Norilsk to sell African nickel stakes to Botswana’s BCL for $337 mln – by Silvia Antonioli (Reuters India – October 20, 2014)

http://in.reuters.com/

Oct 20 (Reuters) – Russia’s Norilsk Nickel , the world’s top nickel and palladium producer, said it had agreed to sell stakes in two African nickel mines for $337 million to BCL, a Botswana-based copper mining firm looking to expand.

Norilsk will transfer to BCL its 50 percent interest in the Nkomati nickel and chrome mine, in South Africa, and its 85 percent stake in the Tati Nickel Mining Company, in Botswana, the two companies said on Monday.

BCL will also assume all attributable outstanding debt and environmental and rehabilitation liabilities associated with the assets.

Norilsk embarked on a new strategy last year that includes pulling out of international assets that it has identified as non Tier-1 mining operations. Tier-1 is an industry designation for what are typically the biggest and lowest-cost mines.

“The sale of the African operations marks a major milestone in our commitment to deliver the new corporate strategy. The transaction is part of the management’s roadmap to release capital from non-core assets and will have a positive impact on the company’s return on invested capital”, Pavel Fedorov, Norilsk Nickel First Deputy CEO said in a statement.

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