Glencore CEO in 'No Hurry' to Sell Stake in Platinum Producer Lonmin; Talks between Vale Break Down
Swiss-based mining company Glencore PLC (LSE:GLEN) is in no hurry to sell its stake in South African platinum mining company Lonmin, the company’s CEO said earlier this week.
"We're in no rush—there's no urgency," CEO Ivan Glasenberg said.
Glencore, the world’s largest commodities trader and fourth-largest mining company, acquired a 25 percent stake in Lonmin in 2013.
However, with falling platinum prices, the company’s CEO has been reported as saying the acquisition did not fit into its strategic plan, adding the company was not familiar with the platinum business.
The news sent shockwaves across the industry that Glencore could potentially be in the market of selling its 25 percent stake in the troubled platinum producing company.
"We'll watch the platinum price and at some stage in the future try to get out of our investment," Glasenberg said.
Lonmin has been hit hard by a wave of strikes in recent years, costing the company over $2 billion. Shares for the company have also fallen, dropping by a quarter this year.
Glencore was also reportedly in talks with Brazilian mining conglomerate Vale to combine their nickel assets in Canada in a deal that would have produced over $1 billion in annual cost savings. According to Reuters, however, the talks have broken off.
"Both sides more or less agreed on what the optimum structure of a combined Sudbury business would look like, but to enable that to be created, very difficult decisions needed to be taken, and the appetite or the ability to take those decisions was not there," a source with knowledge of the situation said.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.