Vale Reviews Canadian Nickel Asset As External Factors Pressure Demand

Vale Base Metals, a Canadian subsidiary of Vale SA VALE, has announced a strategic review of its Thompson nickel asset. The review indicates the potential sale of this long-standing operation as part of the company's global portfolio optimization strategy.

"Our objective is to build a leading energy transition metals business, and this strategic review is part of the process to ensure global competitiveness," said CEO Shaun Usmar.

The Thompson asset, a cornerstone of Vale's Canadian operations for over six decades, contributed 10,500 tons of finished nickel for the 12 months ending Q3 2024.

The site has been one of the company's main nickel assets, with two underground mines, an adjacent mill, and significant exploration potential along its 135 km stretch. However, the peculiar state of the nickel market prompted the firm to start re-evaluating its portfolio role.

Nickel prices surged to record highs in 2022, surging to nearly $34,000 per metric ton driven by fears of supply disruptions and increased demand for electric vehicle (EV) batteries, but have declined sharply.

Indonesia, now producing over 60% of the world's nickel, significantly ramped up output between 2020 and 2024, adding 1.5 million tons to global supply. This oversupply has depressed prices, with the annual average falling to $16,812 per ton in 2024, a 22% drop from the previous year.

Despite a modest rebound in early 2025, prices remain low, trading around $15,660 per ton. The situation is further reflected in surging inventories. London Metal Exchange stockpiles rose from historic lows in 2022 to over 230,000 tons by late 2024, as Reuters noted increased deliveries from China and Indonesia.

While global EV sales increased by 25% in 2024, nickel demand has weakened due to a shift toward lithium-iron-phosphate batteries, particularly in China. Slower EV adoption in North America and Europe (favoring nickel-rich batteries) and rising sales of hybrid vehicles with smaller batteries have tempered nickel demand.

According to Adamas Intelligence, the average amount of nickel used per EV battery fell by 16% year-over-year in 2024. Although Statista projects European EV sales to grow at 11.5% until 2030, Donald Trump's EV Policy rollback, accompanied by the possibility of Canadian tariffs, threatens the North American market.

Thus, Vale's potential decision to sell the Thompson asset wouldn't be surprising, but it'd be a step back for the second-largest global nickel producer.

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