With nickel prices lower than precious years, the major mining companies of Glencore Xstrata and Vale are in discussions to combine their nickel-mining operations in Canada’s Sudbury Basin in an attempt to cut costs.
Even though neither company has confirmed the collaboration, discussions have been ongoing since Glencore finished up its acquisition of Xstrata earlier this year. The potential savings are rumored to be approximately several hundred million dollars per year.
But don’t expect a merger as Jean Charles Cachon, a professor of business strategy at Laurentian University, maintains, “They have separate systems. A merger of the two firms is very unlikely due to anti-trust regulations in North America and Europe.” He continued by stating a more plausible scenario would be seeing “the companies pool some resources … but remain autonomous.”
It is estimated that the companies hope to reach an agreement over the next several months, but insiders don’t think the decision will be made before January.