Brazilian mining giant Vale is cutting jobs across its global operations as nickel prices continue to fall, the company said on Tuesday, citing the need to remain competitive in current market conditions.
Vale declined to specify the number of positions affected at its Sudbury, Ontario operations, but indicated the cuts would focus on “people in non-operating roles” as part of a shift toward a “new decentralized structure.”
The restructuring comes as North American nickel markets face declining demand, with China developing batteries that don’t contain nickel, while Indonesian operations flood the market.
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“It’s really taken the whole market by surprise,” said George Heppel, BMO’s vice-president of commodity research. “And it’s not just the miners. I think a lot of the electric vehicle companies as well have been surprised by how quickly battery technology companies have been able to sort of thrift out nickel.”
The sector’s challenges stem from over-investment in the late 2010s, when companies anticipated potential shortages due to electric vehicle growth. Heppel said continued Chinese investment in Indonesian nickel operations has maintained pressure on prices, which could remain low for years.
“Typically when prices are very high, Chinese chemical engineers and Chinese mining engineers figure out a way of extracting more supply from poorer quality ore bodies in a way which nobody really expects,” Heppel said.
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