Could Vale Benefit from Electric Vehicle Demand?



Electric vehicles driving nickel demand

Vale (VALE) is optimistic about the growing popularity of electric vehicles. Vale’s executive director of base metals, Jennifer Maki, said the market forecast suggests that electric vehicles could represent 7%–20% of the global auto market by 2025, up from 1% in 2017.

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Preserving nickel optionality

The company wants to preserve its optionality in nickel ahead of the expected boom in electric vehicles (TSLA). Nickel, cobalt, and lithium are used in electric vehicles’ rechargeable batteries.

On Vale Day on December 6, 2017, Vale pared back its production forecasts for nickel (DBB) for the next five years. It cut its nickel volume estimate by 15% to 263,000 tons in 2018. Its focus is to shift to a smaller footprint in nickel as it improves the competitiveness of the business. Its strategy is to align investments and production based on market conditions, which is also in line with its strategy to produce less amid low prices so that it can produce more when demand recovers.

Preserving nickel optionality

Cobalt prices surged last year with the metal’s ever-increasing demand for use in electric vehicle batteries and constrained supply. Most mining is concentrated in the Congo, which can be politically volatile. Recently, Reuters reported that Volkswagen was in talks with suppliers Glencore (GLNCY) and Freeport-McMoRan (FCX) to secure a long-term cobalt supply.

Vale could significantly benefit from rising cobalt prices. Its Voisey’s Bay Mine in Labrador, Canada, is a major source of cobalt for the company. The company has yet to decide on extending the life of this mine, which is due to exhaust by 2022, by constructing an underground mine.


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