Vale’s Plan to Turn Around $40 Billion Unit Suffers Fresh Blow

(Bloomberg) -- Vale SA’s plan to turn around its copper and nickel-mining unit is taking longer than expected, risking a delay to a possible sale or spinoff of a group the miner says could be worth $40 billion.

Most Read from Bloomberg

• Americans Who Can’t Afford Homes Are Moving to Europe Instead

• These Are the World’s Most (and Least) Powerful Passports in 2022

• Kissinger Warns Biden Against Endless Confrontation With China

• Ford Plans Up to 8,000 Job Cuts to Help Fund EV Investment

• Putin Signals Gas Pipeline Will Restart as Clock Ticks Down

The world’s second-largest iron producer slashed its annual goal for copper output by 19% as it grapples with extended maintenance and additional stoppages at some mills. In the first six months of the year, Vale’s nickel and copper production fell 10% and 25%, respectively.

Vale has been looking for alternatives to unlock value at its base-metals unit, which accounted for almost 15% of the Rio de Janeiro-based firm’s revenue in 2021. The company is yet to decide on whether it would spin off the division responsible for copper and nickel assets, or possibly merge that business with the assets of another company.

After facing several operational setbacks in 2021 -- including a fire at a Brazil’s Salobo copper mine and workers trapped in a Canadian mining –- the company signaled it would need another year of improving mine performance before deciding what to do with the division.

The process of stabilizing Vale’s base-metals operations “remains rocky,” Banco Bradesco BBI analyst Thiago Lofiego said. “We do note that production guidance implies a relevant recovery in production” in the second half of the year, he said. Analysts at Banco BTG Pactual SA analysts said investors may get less confident on the company’s execution.

Most Read from Bloomberg Businessweek

• Sam Bankman-Fried Turns $2 Trillion Crypto Rout Into Buying Opportunity

• Postmortem Sperm Retrieval Is Turning Dead Men Into Fathers

• Brain-Computer Interface Startup Implants First Device in US Patient

• Mortgage Boycott Shows How Deep China’s Property Crisis Goes

• JD Vance May Need Another Peter Thiel Bailout

©2022 Bloomberg L.P.