NEW YORK – Brazilian miner Vale dialled back its nickel output forecasts for the next five years on Wednesday, although the world's top producer of the metal praised its longer term prospects on likely soaring demand for electric cars.
Vale cut its nickel output estimate by 15% to 263 000 t next year and said it was still seeking an investor for its New Caledonia nickel mine.
However, Vale wants to "preserve its nickel optionality" ahead of an expected boom in electric vehicles in the next decade, said Jennifer Maki, executive director of Vale's base metals unit, at an annual investor presentation in New York.
The rechargeable batteries used in electric vehicles have companies scrambling to lock in supplies of key ingredients like nickel, cobalt and lithium.
Maki, who Vale said on Wednesday was leaving the company, pointed to market forecasts that electric vehicles would represent between 7% and 20% of the global auto market by 2025, up from 1% in 2017.
Vale CEO Fabio Schvartsman agreed.
"I'm very positive about nickel, much more positive than I was some months ago," he said.
The company said on Wednesday it would make a decision by the end of next year whether to plough a needed $500-million into its New Caledonia project over the next four years. It has previously said it has received bids to invest in the mine, which is located on a Pacific island.
Vale, which is also the world's top iron ore producer, kept iron ore production forecasts stable for next year at 390-million tonnes, rising to 400-million in 2019. Executives forecast prices for the commodity to remain in line with this year's prices in 2018.
The Brazilian company, which is seeking to cut debt to $10-billion from $21-billion, also said that it expects to sell up to $1.5-billion in non-core assets to 2020.
That includes divestments of stakes in companies such as Brazilian bauxite producer Mineração Rio do Norte, Australian coal project Eagle Downs, and steel firm California Steel Industries.
Last month, it announced the sale of the Cubatao fertiliser complex for $255-million.
Still, Schvartsman said the company was done with major divestments and was generating cash at a fast enough pace to make asset sales less urgent.
"Vale more than anything will be a big net cash generator" in the next few years, he told reporters.