When you’ve got the president of Vale, Eduardo Bartolomeo in recent times saying these sorts of things concerning battery minerals…”we think we can be the supplier of choice for North America - Tesla, Ford, General Motors. But we need to produce. We need to get the production up. That’s fundamental. Then we need to get the reserves and resources.”
“Customers in this fast-growing market want high-purity, responsible sourcing nickel, and Vale is ready to supply it. percentage will increase to 30% to 40% in the coming years”.
“As a world leader in the production and supply of responsibly sourced nickel, Vale has been engaged in stakeholder conversations [partes interessadas] at all points of the supply chain to explore partnership possibilities”, he points out.
It’s keen on low carbon nickel for this market. Chinese, where 80% of the world’s sulphate is produced, will just not cut it. In the news of late is a proposed sulphate plant at Becancour, Quebec which is to have a 25 thousand tonne output of low carbon nickel sulphate that will form part of the recently inked Tesla contract. But the market is growing fast, high volume battery plants being built in the US at a rapid rate and needs more supply. Imo output from Jaguar features in Vale’s plans for supply to this market, it simply must as genuine, premium green nickel sulphate just doesn’t exist yet, but will once these mines come on line.
The issue of profit incentive for Vale when it comes to Jaguar is one to contemplate as on the surface an “arms length contract” doesn’t provide room for a whole lot. Looking deeper though I believe they’ll be able to charge a premium for Jaguar’s nickel which will add some more meat on the bone in addition to the .5% net operating royalty built in to the off take. And if one looks at OZL’s recently developed symbiotic relationship with Vale which sees them sharing synergies with them as CTM does, within off take agreements they share sees Vale leveraging their in country transport system to get product from mine to port allowing them excellent margins within this arrangement. Imo Jaguar will get to 1m tonnes, who knows how many more Jag regional will add when its turn comes - this opens up a serious avenue for profit previously not considered - freight.
These reasons among others, makes it clear to me that a takeover is a low possibility as Vale have leveraged their entire system to bring Jaguar online very profitably but with absolutely no outlay or risk, but if there were a candidate certainly OZL would be a ready made, hand in glove one.
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