Multinational metals and mining firm Vale is reportedly planning to make an investment of $500m over the next three years in its struggling New Caledonia nickel mine.
The company will invest the capital, from 2019 to 2022, on its own after previously seeking a partner for the project.
Vale chief executive Fabio Schvartsman was quoted by Reuters as saying that the decision to go alone reflects the company’s new understanding of the significance of an expected upswing in sales of electric vehicle (EV).
Speaking to media on the sidelines of the company’s investor day presentation in New York, Schvartsman said: “The decision to continue on our own was made because [New Caledonia] could be a very important part of strategy to supply nickel especially given the EV revolution.
“We thought initially that we could have a partner but it was in a moment when we had no clarity on the incoming EV revolution.”
Nickel CMNI3 is a key ingredient in lithium-ion batteries used in electric cars; it is also used in manufacturing stainless steel. Last week, the index touched multi-month lows after demand concerns increased due to Chinese steel price weakness and the trade war between Washington and Beijing.
The project losses totalled around $1.3bn from 2014 to 2016. Vale New Caledonia comprises the Goro mine, which commenced operations in 2010.
Meanwhile, Vale has also revised the production forecasts for nickel for next year to 244,000t from the previous estimate of 263,000t.
In a separate deal, Vale entered into an agreement with Glencore to undertake joint exploration activities in Canada.
As part of the partnership, the companies will explore Vale’s Victor mine for copper and nickel and Glencore’s Nickel Rim South mines.
The deal is expected to result in reduced costs and capital expenses.