IGO to record impairment against nickel assets in strategy shift
IGO has been undertaking a strategic review in an attempt to revaluate its resources.
Brazil’s Vale (NYSE:VALE) denied Monday it had decided to suspend the sale of a stake in its loss-making New Caledonia nickel mine (VNC), adding it continues to seek for a partner.
The statement, contained in a securities exchange filing, comes in response to a Reuters’ report indicating the company would delay the sale of the asset, located on the remote South Pacific island of New Caledonia, for up to a year after initial bids came in at the lower end of expectations.
Production costs at VNC, one of the world’s top nickel mines, continue to be too high for it to be profitable. At the same time, prices for the metal are expected to fall in the coming year due to a flood of cheap ore entering the market.
BMI Research said in a note Monday it expected nickel miners to witness subdued output growth in the coming years as operational difficulties come to the fore and low prices reduce profit margins.
“Major nickel miners with a high degree of diversification will continue to improve balance sheets as they benefit from higher prices of other metals, while those that are more exposed to nickel stand to lose out,” the analysts wrote.
Vale New Caledonia comprises the Goro mine, a processing plant and port. Last year, it produced 34,000 tonnes of finished nickel.
Vale, the world’s No.1 iron ore producer, said last month its goal is to slash costs to $10,500 to $11,000 a tonne at VNC by the end of the year, as it ramps up production and prices of by-product cobalt soar.
VNC is made up of the Goro mine, a processing plant and the port of Prony (pictured). Last year, it produced 34,000 tonnes of finished nickel. (Image courtesy of VALE S.A.)
