Base metals accounted for almost 15% of the Rio de Janeiro-based miner’s revenue in 2021, of which 6% came from nickel. But if the kind of nickel gains seen over the past few days are sustained, those percentages will change and Vale’s earnings will get a big jolt.
Vale has been looking into spinning off the Canada-based base metals business to free it from the valuations discounts of its Brazilian iron ore operations. Even before the recent nickel price action, Vale said it saw $40 billion of potential value in base metals. High metal prices may also help Vale unlock new nickel projects in Indonesia.
“We are not arguing nickel prices are sustainable at current levels, but we reiterate our call that Vale’s base metals unit is poorly priced-in and can offer relevant upside potential for investors ahead,” BTG Pactual analysts led by Leonardo Correa wrote. “The nickel price rally could be another source of earnings…
