Vale reported on Monday that it has once again halted operations at its Onça Puma nickel mine after the state of Pará, Brazil, obtained a court order to reinstate the suspension of the venture’s operating license.
Operations at Onça Puma were first halted in early October, but a judge granted Vale an injunction on October 7 allowing it to resume activities.
The suspension comes after a new decision by a higher court. Vale said that it would take measures seeking to overturn the decision.
Pará’s environment department said on October 4 that the license was suspended due to Vale’s failure to comply with terms of the permit, which included an obligation to provide services for communities surrounding the mine.
Small farmers in the region allege that they live in isolation and have not received any support from Vale since the project started up.
According to a report from the NGO Finnwatch, Vale operations generated deforestation and polluted the Cateté river, and threaten the lifestyle of the Amazon’s indigenous tribe known as the Xikrin.
In 2018, a Brazilian court ordered Vale to pay the Xikrin and Kayapo indigenous tribes $26.8 million over river contamination and public health-related issues.
Vale’s nickel production in Brazil reached 16,000 tonnes in 2020. Onça Puma accounted for 7.5% of its total nickel production last year. Output at the mine is well below nominal annual capacity of 58,000 tonnes of nickel contained in ferronickel.
The price of nickel did not react to the news from Vale, with LME three month prices unchanged at $20,020 a tonne on Monday. The metal hit a 7-year high of $20,705 on September 10.
Nickel is facing a “structural uplift in pricing” thanks to booming demand from the automotive sector, Jessica Fung, head strategist at Pala Investments said at the LME Week Seminar last week. Demand from EV batteries is expected to increase five-fold over the next decade.
That means EV’s will require more than 1m tonnes according to BMO Capital Markets in a recent report, compared to total mining production today of some 2.5m tonnes.
