Vale to restart Onça Puma nickel complex

The Onça Puma plant produces mainly ferronickel. (Image: Agência Vale)

Brazil’s Vale (NYSE: VALE) has begun working on resuming operations at its $3 billion Onça Puma nickel mining complex, as the country’s Supreme Court suspended injunctions against the miner earlier this month.

Nickel mining at Onça Puma, in Brazil’s northern Pará state, has been halted since September 2017 as the company failed to undergo a requested environmental impact on local indigenous communities affected by pollution caused by the mine.

The complex, which also had to suspend nickel processing in June this year, produced a record 7,100 tonnes of nickel in the third quarter of 2017, up 29% compared with the prior three-month period and up 7.6% from the third quarter of 2016, Vale said at the time.

Mining has been halted since September 2017 as Vale failed to undergo a requested environmental impact on local indigenous communities affected by pollution caused by the operation

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

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

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 vehicles (EVs).

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 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.

In a separate statement, Vale announced Tuesday that it would invest R$190 million (around $46m) in plans to reconstruct and develop the communities of Macacos (Nova Lima), Barão de Cocais, and Itabirito, which were impacted by a deadly dam burst at the company’s Córrego do Feijão mine in January. The accident unleashed a torrent of thick mine waste, killed more than 250 people and cost Vale criminal charges.

The miner said the funds will be allocated mainly to construction and refurbishment of public facilities, cleaning and dredging of watercourses, construction of schools, as well as improvement of social and health programs.

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