Nickel News Latest: Nickel Price Rises as Vale Halts Production

The spot nickel price saw a slight boost Friday after news hit that Vale (NYSE:VALE), the world’s second-largest nickel producer, has halted operations at its Brazil-based Onca Puma nickel mine. 
Onca Puma is part of a complex of mines operated by Vale in Brazil’s Carajas area, and according to Reuters, a Brazilian federal court has said Vale will not be allowed to restart production at the mine until it’s demonstrated the actions it’s taken to compensate those communities. It’s also ordered the company to deposit $287,000 for each indigenous village in the area.
Relations between Vale and the communities in the Onca Puma area appear to have been fraught for quite some time — another Reuters article states that the company’s operations “face regular legal protest and action by native Brazilian groups seeking better schools, health care and other public services.”
But according to Vale, the protesters are barking up the wrong tree. The company told Reuters that it’s duly licensed to operate Onca Puma, and that its license requires it “to work with the native groups to establish mitigation measures on indigenous lands for potential environmental problems that the mine might cause.”
However, the license doesn’t require it to make direct cash payments to those communities, and the company believes that the services the native groups are asking it to finance are the responsibility of Brazil’s federal and state governments. It plans to challenge the ruling in order to restart operations at the mine.

Nickel news latest: price to rise?

As mentioned, the spot nickel price saw a bit of a bump this past Friday after the news about Vale hit the market — it rose from $4.6903 per pound at the beginning of the day up to $4.765 by the end of it.
Though small, that boost was likely welcome news for nickel market participants. While there’s some hope for the metal’s long-term prospects, shorter term the nickel price is expected to remain low. And indeed, the base metal has certainly been on a downward trend lately, as is indicated by the chart below:

Six-month spot nickel price. Image courtesy of Kitco.

There’s of course no guarantee that the production halt at Onca Puma will have a lasting impact on the metal’s price. After all, if Vale is able to sort the situation out quickly, it may not be long before the lights go back on at the mine. Furthermore, while Vale is the second-biggest nickel producer in the world, Onca Puma is not its largest source of nickel — the mine accounted for about 8.8 percent of Vale’s finished nickel in Q2 2015, less than the company’s Canadian and Indonesian operations.
That said, it’s definitely nice to see at least a small boost in the nickel price amid the overall gloom. Investors will no doubt be watching to see how long it lasts.

Company news

It’s also worth noting that some nickel-focused companies continue to fare well despite the metal’s low price. For instance, Buxton Resources (ASX:BUX) made headlines last week after it announced the discovery of “significant” nickel-copper sulfide mineralization at its Western Australia-based Double Magic project during maiden Phase I drilling. Its share price rose a whopping 148 percent on the news.
Monday the company was back with more news, stating that it’s completed that Phase I drilling. According to the company, the program as a whole “confirm[ed] the strong prospectivity of Double Magic, with all drill tested EM conductors proven to be from the occurrence of Fe-Ni-Cu sulphide mineralization.”
Unsurprisingly, the company plans to keep moving quickly at Double Magic — a Phase II drill program is expected to start up in the coming weeks, once statutory ground disturbance applications have been approved.
Also on Monday, Talon Metals (TSX:TLO) said that it’s signed a definitive agreement to sell its 1-percent net smelter return royalty on the Sao Jorge gold project to Orion Mine Finance Group. The move is part of the company’s strategy to shed its non-core assets and focus on the Tamarack North project, which it’s optioned from Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) subsidiary Kennecott Exploration Company.
 
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.