Vale to shut Manitoba nickel smelting, refining in 2018

Brazilian miner Vale will close its nickel smelting and refining operations in the western Canadian province of Manitoba in 2018, but will continue mining and milling despite the plunge in the price of nickel, a company official said on Thursday.

Vale, the world's biggest nickel producer, will cease smelting and refining in Thompson, Manitoba, once work is complete to allow it to produce and ship nickel concentrate from its mill, said Mark Scott, Vale's director of mining and milling in Thompson.

Smelting and refining operations were originally scheduled for closure this year, until the company struck an agreement with workers and Canada's environment department to keep them running until as late as 2019.

London nickel futures CMNI3 fell on Thursday to their lowest level in seven years, less than $9,000 per tonne. Nickel has been hurt by a supply glut and softer demand from China, the largest consumer of the versatile metal, which is used in products ranging from coins to rechargeable batteries.

Scott, speaking on the sidelines of a Winnipeg mining conference, declined to say if Thompson nickel operations were losing money in light of weak prices. Vale, also an iron ore producer, last month posted a third-quarter net loss of $2.1 billion.

The company will finish its feasibility study for Footwall Deep, an extension of the current Thompson ore body, in the 2016 first quarter, and then will put the project on "pause" to await better prices, Scott said.

Vale plans to ship nickel from its mine at Voisey's Bay, Newfoundland and Labrador, to a new processing facility at Long Harbour in the same province, instead of to Thompson and to Sudbury, Ontario.

The company is also expanding its Thompson tailings area, which contains mining waste such as metal filings, water and occasionally chemicals, even as Vale and BHP Billiton Plc BLT.L face criticism over a burst dam at their Brazil iron ore mine.

Scott said the Thompson tailings project will add measures to better control water flow and include an independent review of engineering work.

Meanwhile, Vale has placed its Kronau potash-mining project in the Canadian province of Saskatchewan on hold, spokesman Cory McPhee said on Thursday. The sector has also been dogged by falling prices.