Vale Base Metals sells majority stake in Thompson Nickel Belt to Canadian-led consortium

By Isabel Teles and Divya Rajagopal

SAO PAULO/TORONTO, Feb 19 (Reuters) - Vale Base Metals has agreed to sell its majority stake in the Thompson Nickel Belt mine in Manitoba to a consortium of buyers, a move that would lead to the creation of a new nickel company in Canada.

The consortium of buyers includes Toronto-based exploration company Exiro Minerals, private equity firm Orion Resources Partners, and Canada Growth Fund. Brazilian mining firm Vale VALE3.SA will retain an 18.9% in the new company, which is named Exiro Nickel, and has signed a five-year off-take agreement with it.

The new consortium will invest $200 million to revive the mine, which Vale has had under strategic review since last year as the price of nickel fell to a five-year low due to higher supply and low demand.

"We still have 20 years' worth of profitable nickel in front of us," said Shastri Ramnath, the CEO of Exiro Minerals. Ramnath, who has been named chief executive of Exiro Nickel, added that the new company has to be able to produce nickel when prices are low and remain competitive.

Vale is one of the world's largest producers of nickel, which is used in the production of electric vehicles and other goods. The company is targeting nickel production of 175,000 to 200,000 tons in 2026.

"This $200 million is not in our pocket; the money is flowing into delivering the competitiveness of this operation going forward," said Shaun Usmar, the CEO of Vale Base Metals. He added that the company is standing by its new owners so that they are not burdened with the legacy liabilities.

The Canadian government officially considers nickel a critical mineral. G7 countries, including Canada, are racing to secure critical minerals such as copper and nickel in an effort to break the chokehold of countries like China and Indonesia on production of these metals.