Vale's Nickel Assets Impairment Results in $3.8 Billion Loss

Business Society, February 24

Foreign media reported on February 22 that Brazilian mining giant Vale announced a net loss of $3.8 billion in the fourth quarter, significantly larger than the previous year, mainly due to impairment of Canadian nickel assets. The company stated that, based on market forecasts, the long-term nickel price assumption was lowered, triggering a $3.5 billion impairment of nickel assets in the base metals segment. Additionally, the write-down of deferred tax assets by subsidiaries impacted $2.8 billion, and a reserve of $449 million was added due to updates in the Samarco joint venture with BHP following UK class-action lawsuits.

Despite the huge losses, Vale’s core profit exceeded expectations. Adjusted EBITDA reached $4.6 billion, up 21% year-over-year, and excluding one-time items, it was $4.8 billion, higher than the market expectation of $4.6 billion. Analysts pointed out that the better-than-expected core profit was driven by rising copper and by-product prices, as well as increased iron ore and copper sales, though some gains were offset by the strengthening of the Brazilian real.

As one of the world’s largest iron ore producers, the company’s quarterly revenue was $11.1 billion, up 9% year-over-year, roughly in line with expectations. Last year, iron ore production hit its highest annual level since 2018. Analysts expect that, despite the staggering accounting losses, the strong core profit performance may lead to a positive stock response on Friday.

The nickel asset impairment reflects the challenges faced by the global nickel market. Amid ongoing expansion of Indonesian supply and slowing electric vehicle demand, nickel prices have come under pressure, forcing producers to reassess asset values. Vale’s impairment is not an isolated case, indicating a sector-wide revision of long-term nickel price expectations. Meanwhile, the strong performance of the copper business highlights the divergent fates of different metals during the energy transition. The mining giant is currently facing a complex resource portfolio valuation reassessment.

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