RIO DE JANEIRO, Nov 7 (Reuters) - Brazil's Vale confirmed that it is in talks with Glencore Xstrata over potential cooperation between the mining groups' nickeloperations in Canada's Sudbury basin, in an effort to cut costsas prices languish.
Vale said on Thursday it was not planning "a corporate jointventure" in Sudbury, but was looking at other options to joinforces and save cash. Nickel prices have fallen by around afifth since January to around four-year lows, weighed down byover-supply.
"We are looking at ways to create synergies for ournon-ferrous operations," Peter Poppinga, Vale's head ofnon-ferrous metals, told analysts on a quarterly earnings call.
Reuters reported last month that Glencore and Vale hadrevived talks over long-debated cooperation in Sudbury, with thecompanies considering a number of options for their mining andprocessing operations in the area. Sources familiar with thesituation said then that talks were at an early stage.
The two main operators in Sudbury have held talks on joiningforces on more than one occasion before, both as Inco andFalconbridge and, later, as successor companies Vale andXstrata. Analysts have long said a tie-up would make sense fortwo operators mining the 60 km-long, oval-shaped formation knownas the Sudbury basin.
The sources had said a tough nickel market, pressure on Valeover nickel difficulties at its Goro nickel-cobalt mine in NewCaledonia and elsewhere could make a deal more likely this timethan in the past. Equally, the problems across Vale's nickeldivision could prove distracting.
Vale said on Thursday it did not expect to have to take awritedown on the value of Goro.
- Glencore Xstrata