Mining company Vale believes that attracting partnerships for its base metals unit could add value to the company’s assets, given the prospects of growing demand for products such as nickel and copper for the production of batteries, it said this Friday (28) the company’s president, Eduardo Bartolomeo.
The possibility of segregating the asset was previously published by the company, but Bartolomeo pondered that this issue has not yet passed the approval of the board of directors.
“We do foresee a partnership entering, this is natural… We have engaged with the market to do this”, said Bartolomeo, in a conference call with analysts to comment on the results of the third quarter.
The executive highlighted, however, that the company does not plan to sell the base metals unit.
“It’s the best asset in the world, Vale will keep it. Now, what we want is a possible partnership to look to the future.”
Bartolomeo also reiterated that an eventual IPO (initial public offering of shares) of the base metals unit is also a possibility, “but we need to fix the asset first”, without giving details.
In attracting the partnership, Bartolomeo stressed that a potential partner needs to perceive the same value that Vale perceives in the asset.
New projects in progress
Given the good prospects for the base metals division, Vale approved an investment of US$ 555 million for the construction of the second furnace at Onça Puma, to add capacity from 12,000 to 15,000 tons of nickel per year. The project is expected to start operating in 2025.
Bartolomeo also highlighted the start of the first phase of the C$945 million Copper Cliff Complex South Mine Project in Sudbury, Canada.
Phase 1 is expected to nearly double ore production at the Copper Cliff mine, adding around 10,000 tonnes per year of contained nickel and 13,000 tonnes per year of copper.
“These are critical milestones as we position base metals as a key supplier essential for the energy transition,” said the president.
Cosan entry
Bartolomeo also commented during the conference call that Cosan’s recent decision to acquire a stake in Vale’s shares was “extremely positive”.
“We see this move by Cosan as a validation of our investment, of our work. When you see Cosan, with their history of creating growth. People and companies with this mindset, and who choose our company, makes us very proud and optimistic,” he said.
The conglomerate Cosan announced earlier this month that it had acquired a stake of approximately 4.9% of the total common shares of mining company Vale.
According to him, Cosan will be able to help Vale see and anticipate opportunities and unlock value.
The executive also said that interactions with Cosan “have been great” and that they recognize that Vale is materially with mitigated risks, in compliance with social environment and governance issues.
For BTG, Vale had “a quarter to forget”
Vale shares fell more than 4% this Friday, after the mining company reported a 18.7% drop in third-quarter net income on a year-on-year basis, with the impact of the decline in iron ore prices, its main product.
At 10:33 am, the company’s shares fell 3.16%, to R$ 68.67, among the worst performances of the Ibovespa, which yielded 0.17%.
In the period from July to September, Vale’s net income totaled US$ 4.455 billion (R$ 23.8 billion). Adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) from continuing operations totaled US$ 3.67 billion (R$ 19.6 billion), down 47% year-on-year.
For analysts Andre Vidal and Helena Kelm, from XP Investimentos, Vale reported worse results than expected, due to lower prices for iron ore, but also for nickel, combined with higher costs.
They also drew attention to the fact that the company had revised the concept of expanded net debt, while keeping the target unchanged in the range of US$ 10 billion (R$ 53.5 billion) to US$ 20 billion (R$ 107 billion ) –thus effectively increasing the target.
The review, according to Vale, was aimed at better alignment with market practices and excluded operational and regulatory commitments.
“A quarter to forget”, said analysts Leonardo Correa and Caio Greiner, from BTG Pactual.
Also a backdrop to the stock move, iron ore futures fell on Friday, with the contract trading below $80 a tonne in Singapore.
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