Vale Base Metals chairman Mark Cutifani's remarks this week to Reuters new agency about a pursuing a business combination between his company and Glencore in the Sudbury basin has mining analyst Stan Sudol wondering, “What took them so long?”
The Sudbury-raised and Toronto-based owner of the Republic of Mining website is a keen observer of the global nickel industry and of the Sudbury camp.
Now is the “perfect time” for a business combination between Sudbury’s two largest miners, and one that’s long overdue, he said.
There have been on-again, off-again discussions since the former INCO and Falconbridge, and their predecessor companies, sparred over consolidating the Sudbury mining camp under one operating entity since the mid-2000s.
The competitive cross-town rivalry between the two companies is dead and the geopolitics of strategically placed critical minerals has entered the picture, Sudol said, not to mention the insatiable demand for the metals needed to feed the electric vehicle and clean-tech revolution.
Despite volatile prices in nickel and other critical minerals over the last few years, there remains a worldwide scramble by manufacturers of electric vehicles (EVs) and other digital and clean technologies to secure reliable, and preferably domestic, sources of mineral raw materials
Sudbury is as safe and reliable a jurisdiction as one can find. It’s why Sudol views the mineral-rich Sudbury basin as the “epicentre of critical mineral production for the EV transition in North America.”
“More of the country should realize this is an extraordinary place,” Sudol said.
“The world is desperate for clean and green nickel, which we have in the Sudbury basin. We basically would save a lot of money and access more ore if we developed a single entity.”
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Sudol feels a business combination would likely take the form of a Glencore-Vale joint venture in the Sudbury basin rather than one company acquiring the assets of the other. It would identify new deposits and get more mines into production quicker.
A similar combination was struck in 2019 between Barrick and Newmont on the Carlin mining trend in Nevada — one of the oldest mining regions in the U.S. — to realize cost savings and operating efficiencies.
But the U.S. mining industry is having permitting difficulties putting new mines into production in greenfield areas — areas that have never been mined before — whereas the entire city of Sudbury is one big industrial brownfield, Sudol said. It’s a mining-friendly community with a robust supply and service network and postsecondary institutions embedded in the sector through innovation and training.
“A merger will help both companies to synergize their exploration programs,” Sudol said, allowing some of the industry’s best geologists to explore the Sudbury basin in a more systematic way to find new mineral deposits at depth.
There is one publicly revealed instance where Glencore and Vale have teamed up.
On the east end of the Sudbury basin, Vale has been working with Glencore on a joint study on the Nickel Rim South extension and a potential joint venture for a project that involves accessing minerals sitting on the two neighbouring companies’ property boundary line.
Dino Otranto, Vale’s former chief operating officer for North Atlantic Operations, once called it a "fantastic ore body" containing nickel, copper and platinum group metals. If delivered upon, Otranto said, it would be a great demonstration of how two companies that have often conducted business separately can put their historic differences aside.
A huge amount of valuable ore can go untouched because of the need to leave a wide enough boundary between two separate mines, said Sudol.
“Ore deposits don’t recognize boundary lines.”
Sudol envisions more of these projects taking place to gain access to minerals without having redundant and costly mine shafts and infrastructure being built to access the same ore body. It’s a “win-win scenario” for both companies, he said.
The next generation of Sudbury deposits will be deeper, but it’s the high-value polymetallic nature of the ore — containing nickel, copper, cobalt, platinum group metals, silver and gold — that will make it economical to chase minerals at depth.
Then, there’s the existence of local abandoned and decommissioned mines.
Some smaller deposits are not economic for Vale and Glencore to reopen but make sense for nimble operators like Magna Mining and SPC Nickel. Both are working advanced exploration projects at former mine properties on the west end of the basin.
These small mines could provide supplemental feed for Sudbury’s huge milling, smelting and refinery capacity.
Sudol emphasized the Western World can only rely on Canada and Australia for sulphide nickel deposits to support electric vehicle and green-tech transition. Russia and its nickel deposits are blackballed because of the invasion of Ukraine.
Most of the nickel laterite deposits in Indonesia, New Caledonia and the Philippines are largely carbon-emitting open-pit operations. Coal is the primary source of energy. The tailings storage and the post-mining land restoration practices are not on par with Western standards.
Comparatively, he said, “Sudbury and other nickel deposits in Canada are clean and green, and it’s becoming a very important issue for consumer of electric vehicles.”
“There’s no point in buying an electric vehicle and trying to say ‘I’m helping the environment’ when the material that we dig out of the ground has been so detrimental to the environment where the nickel deposits are found.”
Sudbury should be marketed as the hub of the EV world because material is processed at the highest standards and, in Ontario, most of power generated is carbon-free, he said.
Sudol would like to see the City of Greater Sudbury advocate for new refineries and smelters, installed with the latest processing technology, to provide more nickel-handling capacity in North America.
He doubts that a merger in the Sudbury basin would result in any major job losses in positions that might be considered redundant. The industry is chronically short of these skilled people “and the demand for nickel is going to be so great, I would really be surprised if there any job losses,” he said.
