As the world economy continues to unravel, Vale (RIO-N) is closing its Copper Cliff South nickel mine in Sudbury, Ont., suspending its Voisey’s Bay nickel operations in Labrador for a month next July, and launching a voluntary retirement program.
The world’s second-largest mining company also announced it would postpone the start of development by a year at its Copper Cliff Deep project. Vale had planned to spend US$138 billion on development in 2009. Further cost-cutting initiatives include an early retirement program for its staff worldwide.
Along with many other mining companies, Vale has unveiled a string of bad news over the last two months. On Dec. 8, Vale said it must shut down operations at two of its pellet plants at the port of Tubarao, in the state of Espirito Santo in Brazil. The stoppage follows the closure of two other Vale pellet plants at the port of Tubarao since Nov. 5.
That news follows an earlier announcement (Nov. 21) that the company planned to shut down two-thirds of its iron ore pellet production from the end of November to mid-January at its joint-venture operation Samarco Mineracao. Vale holds a 50% stake in the plant, whose production capacity is 21.6 million metric tonnes of pellets a year. BHP Billiton (BHP-N, BLT-L) owns the other half of the operation.
Vale is the largest producer and exporter of iron ore and pellets and holds a third of the transoceanic market. The company is also the world’s second-biggest nickel producer after Russia’s Norilsk Nickel (NILSY-O, MNOD-L).
In October, Vale said the global slowdown of industrial production and in particular steel production meant that it would have to dramatically scale back its iron ore mining to adjust to an expected 20% production cut by the world’s steel-makers. As a result, it cut iron production by an annual rate of 30 million tonnes, or 10%.
Manganese ore and ferroalloy operations in Brazil have been suspended from December to January, Vale’s Dunkerque ferroalloy plant in France will be idled until April, and its plant in Mo I Rana, Norway, will have its furnace maintenance extended until June.
In Indonesia, Vale is discontinuing the usage of higher-cost thermal power generation, which will nickel-in-matte output by 20%, or about 17,000 tonnes. In addition, its utility nickel refinery in Dalian, China, will run at 35% of its nominal capacity.
At presstime, Vale was trading at about US$10.47 per share on the New York Stock Exchange in a 52-week trading of US$8.80-44.15 per share.
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