Vale SA capped its best week since January last year amid a recovery in industrial metal prices and as investors welcomed the miner’s latest push to unlock value at its nickel and copper division.
Shares in the world’s No. 2 iron ore producer and major nickel supplier surged 11% this week, outpacing peers. That’s as iron ore futures recover from a nine-month low and nickel jumps 12%. The industry is getting a boost from a slight pullback in the dollar at a time when the onset of peak construction season in China bolsters sentiment.
In Vale’s case, the metal price recovery is adding to a positive reaction from an update of the company’s base-metals turnaround presented to analysts and investors in Canada this week. The Rio de Janeiro-based firm raised its nickel output guidance while signaling it expects a final decision on the way forward for base metals by year-end. Bank of America Corp. analysts noted Vale’s “more vocal” approach regarding the base-metals plans, estimating it could unlock as much as $13 billion.
“Management stated they believe the best course of action is to create a dedicated vehicle for future-facing commodities,” the BofA analysts wrote. “The company’s idea is to have a vehicle independent from Vale, both on a governance, as well as in a balance sheet basis.”
(By Mariana Durao and Vinícius Andrade)