News surfaced this week that Mick Davis, former CEO of Xstrata and now head of investment vehicle X2 Resources, is thinking of offering $5 to $7 billion for Vale’s (NYSE:VALE) nickel assets. 

The bid has been confirmed by neither X2 nor Vale, according to Reuters, but analysts have given plenty of feedback. Unfortunately, the consensus seems to be that the amount Davis is offering won’t be enough.

“Any offer at this level … would be far too low for Vale to consider, in our view,” the news outlet quotes Alex Hacking, an analyst at Citigroup, as saying. He’s valued the entire business at $20 to $25 billion.

Vale itself valued its base metals business, which also includes copper, at $28 to $35 billion back in December, and revealed plans to list 3o to 40 percent of it as a separate division on the TSX. The company is looking to raise cash on the back of a tough 2014.

Price aside, however, industry insiders seem to think that moving in on the Vale assets is a good move for Davis and X2. One source close to Davis told Reuters, “[t]his is exactly the kind of deal they should do.”

Part of the reason it’s seen as a good plan is that a nickel deficit may be in the cards for 2015. Though concerns about a surplus came up briefly last year, many analysts are now positive on the base metal — indeed, at the end of 2014, Scotiabank’s Patricia Mohr named nickel one of her top picks, noting that the metal’s price is “expected to soar once NPI plants in China have used up their inventory on hand — forcing Chinese stainless steel producers to turn to more costly imports of FeNi and nickel cathode.”

For investors, however, the real takeaway is that a key industry figure appears to see hope in the nickel industry, which as mentioned, was hit by some uncertainty last year. Davis’ interest is also important because — at least according to Bloomberg Intelligence analyst Ken Hoffman — it could indicate a rejuvenation of private-equity funding in the mining industry. As those involved in the space well know, that’s been hard to come by in the last while.

It will be interesting to see whether the deal does indeed go through, and if those changes come about in the event that it does.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.