Nickel: Vale New Caledonia sale falls through

Vale New Caledonia

Australia’s New Century Resources has announced that it will not be tabling an offer for Vale’s New Caledonia (VNC) plant and Goro nickel-cobalt mine in New Caledonia. The company said that, although its due diligence and business analysis was now complete and that this had indicated strong potential for sustainable long-term operations, negotiations with stakeholders had not been able to generate a funding package and equity structure for VNC that adequately accommodated a suitable risk/reward scenario for New Century.

Meanwhile, Vale has announced that steps would now be taken to place the facility under care and maintenance in preparation for a possible shutdown should no sustainable solution be found in the coming months. Vale added that it was continuing its efforts with the French State, New Caledonia’s South Province, as well as VNC’s management to achieve a positive outcome for the future of the operation, which at times has produced over 30ktpy nickel and 3.0ktpy cobalt.

Roskill view

Failure to sell the VNC operation is yet another blow for Vale in New Caledonia. The company had previously sought to sell the asset in 2017, but this effort fell through. Towards the end of 2019, Vale announced a restructuring of VNC’s operations that included the closure of the refining stage and a refocusing of production exclusively on nickel intermediates as part of a renewed effort to sell the operation. At that time, it was hoped that mothballing the refining stage would lower the plant’s risk profile and costs but, despite this, the sale to New Century has still fallen through.

Although the refocusing of the plant’s activities solely on nickel-cobalt intermediates means that the type of product currently being supplied by VNC is exactly the type of feed that the growing lithium-ion battery market requires, VNC now faces the risk of closure if no new potential buyer can be found.

Since its inception, VNC has been plagued by start-up delays, capital cost over runs and numerous operating issues, which has resulted in the operation dominating percentiles of the cost curve in recent years.

Roskill’s Nickel: Outlook to 2029 report, 16th Edition was published in April 2020; click here for more information. Roskill’s Nickel Sulphate: Outlook to 2029 report, 3rd Edition was published in May 2020; click here for more information. The reports outline their respective industry trends and forecast for the next decade.

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This article was written by Olivier Masson. Please get in touch below if you wish to discuss further:

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