Vale Coming of Age as Nickel Heavyweight as Prices Sink – by Juan Pablo Spinetto (Bloomberg News – October 23, 2014)
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. Read the rest of this entry »