Vale halts Onça Puma nickel complex, to pay twice the amount of original fine

Onça Puma plant (Image: Agência Vale)

Vale (NYSE:VALE) has halted nickel processing operations at its Onça Puma plant in Brazil on a Federal Regional Court’s order that said the company had failed to undergo a requested environmental impact on local indigenous communities affected by pollution caused by the mine.

The northern state of Pará’s court also doubled the fine applied against the company to 200,000 Real ($52,000) for each day Vale kept the nickel complex open despite a February ruling calling for the full suspension of operations at the site.

Mining at Onça Puma has been suspended since September 2017, when federal prosecutors called for full compensation for damage caused to the Xikrin and Kayapó tribes in the region.

Despite Vale’s numerous appeals, the court confirmed the suspension in November last year, pending the conclusion of additional evaluations.

The world’s largest nickel producer has been in disagreement with the indigenous communities surrounding Onça Puma since 2012, when the Federal Prosecution Office (MPF) started a public civil action against Vale and the state of Pará.

The authority contended operations at the nickel complex operations had contaminate the nearby Cateté River and that the state should not have granted Vale licences for the mine.

Domino effect?

Analysts believe the fresh judicial decision reinforces indigenous communities’ use of courts to oppose extractives projects in the Amazon.

For Edward Sterck, at BMO Metals and Mining, the ruling could create a precedent, as Vale is also in conflict with the same indigenous communities at both its giant iron ore S11D mine and the Salobo copper operation.

It also pushes back against President Jair Bolsonaro’s deregulation efforts for the mining industry, say Victoria Gama and Liz Hypes from Verisk Maplecroft.

Nickel prices climbed around 75% in the first half of 2018, prompting investment in related projects. Vale itself decided last year to move ahead with construction of an underground mine at its Voisey’s Bay nickel mine, located in Canada’s Atlantic province of Newfoundland and Labrador.

It also suspended the sale of a stake in another of its nickel mines — New Caledonia, located on the remote South Pacific island.

Prices have fallen since and remain volatile because of oversupply, despite the metal’s key role in lithium-ion batteries that are used in electric cars.

The nickel sector is becoming a two-tiered market, with a weaker outlook for materials bound for the stainless steel industry and robust demand growth in the electric vehicles (EV) sector that will support prices, according to Goldman Sachs Group.

Brazil holds nearly 13% of the world’s nickel reserves and Onça Puma accounts for about 11% of Vale’s nickel production.

7190 0

Comments

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

More Latin America News