Talks to combine to the nickel operations of Glencore Xstrata PLC and Vale SA have reportedly fallen through and as a result one of Canada’s richest ore bodies will remain divided.
Last year, Glencore and Vale began talking about merging their Sudbury mines, mills and smelters in order to cut costs and cope with the slump in nickel prices. These talks started soon after Glencore acquired Xstrata in 2013. Unfortunately, negotiations then broke down during the first quarter of this year over similar issues that have haunted the Sudbury basin’s previous owners, Inco Ltd. and Falconbridge Ltd.
It was estimated that the miners could extract $550-million in savings from combining their Sudbury assets, where nickel mines operate in extreme close proximity to each other, even sharing shafts and elevators. Now that the price of nickel is increasing because of Indonesia’s ban on ore exports, it is less critical for Glencore and Vale to find savings in Sudbury.