Vale Base Metals boosts Brazil’s nickel dominance with furnace 2 start-up at Onça Puma

Vale Base Metals (VBM), a wholly owned subsidiary of Vale S.A. (NYSE: VALE), has begun operations at its second nickel furnace at the Onça Puma complex in Pará, Brazil. The commissioning of Furnace 2, completed ahead of schedule and nearly 13 percent under budget, lifts the site’s annual production capacity to 40 kilotons of ferronickel. With this expansion, Onça Puma has become the largest ferronickel operation in Brazil, solidifying the company’s position on the global nickel cost curve at a time of rising demand from the stainless steel and electric vehicle sectors.

Why does the start-up of furnace 2 at Onça Puma matter for Brazil’s position in the global nickel market?

The activation of Furnace 2 at Onça Puma is more than an incremental production boost—it represents a major milestone in Brazil’s effort to capture greater market share in the strategic nickel industry. Nickel has emerged as one of the most important metals in the global energy transition, used both in stainless steel manufacturing and as a critical component in lithium-ion batteries for electric vehicles.

Vale Base Metals’ decision to expand in Pará underscores Brazil’s growing role as a reliable supplier to global industrial supply chains. Onça Puma’s expanded 40 ktpa nominal capacity places it firmly among the top global ferronickel assets, offering geographic diversification for customers traditionally dependent on Indonesia, the Philippines, and New Caledonia. The Brazilian government has been eager to promote mining investment in Pará, one of the country’s most resource-rich but underdeveloped regions, positioning projects like Onça Puma as catalysts for local socioeconomic growth.

Historically, Brazil’s nickel output has been constrained by volatility in commodity cycles and operational hurdles. The Onça Puma site itself had previously faced stoppages linked to environmental licensing disputes. By successfully completing Furnace 2 without incident and under budget, VBM is signaling a renewed era of stability and efficiency that could draw renewed investor interest to the country’s mining sector.

How is Vale Base Metals linking the Onça Puma expansion with its broader growth and copper ambitions?

Shaun Usmar, chief executive officer of Vale Base Metals, said the delivery of Furnace 2 demonstrated the company’s ability to execute on complex projects and reinforce its long-term growth trajectory. He emphasized that consistency in project delivery underpins Vale’s ability to attract capital for its copper expansion plans in Brazil.

This alignment of nickel and copper strategy is notable. Both metals are essential to electrification and decarbonization technologies, and Vale has been clear that it intends to expand its footprint beyond iron ore into higher-growth energy transition commodities. By executing Furnace 2 in Pará with zero accidents and generating 2,500 jobs during the three-year construction phase, the company has built a narrative around operational excellence that can support broader growth ambitions.

The Onça Puma complex currently employs more than 1,800 permanent and subcontracted workers, making it one of the largest employers in southeastern Pará. Local officials have consistently highlighted the project’s role in generating stable employment and tax revenues, which in turn fund infrastructure and social development in one of Brazil’s less-developed states.

What are the production and cost-curve implications for Vale Base Metals after this expansion?

VBM confirmed that the commissioning of Furnace 2 adds 15 ktpa of nickel output, bringing Onça Puma to 40 ktpa. More significantly, the ramp-up solidifies the asset’s competitive cost position on the global nickel cost curve, improving margins at a time when price volatility remains high.

Nickel prices on the London Metal Exchange have swung between $16,000 and $22,000 per ton over the past 18 months, reflecting oversupply fears from Indonesia’s rapid production growth and demand uncertainty in the EV sector. For Vale, ensuring Onça Puma sits in the lower quartile of the cost curve is critical for protecting profitability through cycles. By delivering the project 13 percent under budget, VBM has effectively reduced its capital intensity and enhanced return on invested capital.

The company remains on track to achieve its 2025 production guidance of 160 kt to 175 kt of nickel. Longer term, the combination of Furnace 2 at Onça Puma and the underground mine ramp-up at Voisey’s Bay in Canada is expected to support group production between 210 kt and 250 kt by 2030. Analysts note that this growth trajectory would allow Vale to remain a top-five global nickel producer while diversifying geographically.

How does investor sentiment toward Vale’s nickel strategy compare with recent market trends?

Shares of Vale S.A. (NYSE: VALE) have traded in line with global mining peers over the past quarter, reflecting both optimism around decarbonization metals and caution about Chinese demand recovery. As of late September 2025, Vale’s stock was up around 9 percent year-to-date, compared to a 7 percent gain in the MSCI Metals & Mining Index. Institutional investors have shown a preference for diversified miners with exposure to nickel and copper, both viewed as structurally undersupplied beyond 2030.

Early analyst commentary on the Furnace 2 milestone has been constructive. Market strategists note that the expansion de-risks Vale Base Metals’ production guidance for 2025 and could improve EBITDA margins in the base metals segment. That said, some sell-side notes caution that global nickel oversupply risks remain, particularly if Indonesian production continues to surge. For investors, the calculus will hinge on Vale’s ability to maintain cost discipline and secure offtake agreements in the fast-growing EV supply chain.

From a sentiment perspective, institutional flows in September showed modest net buying of Vale shares among North American funds, offset by light selling in Europe. Brazilian funds, meanwhile, have increased exposure, citing the importance of nickel revenues in balancing iron ore cyclicality. Analysts remain split between “buy” and “hold” ratings, with consensus price targets around $14 per share, implying limited near-term upside but stable long-term value.

What role does Onça Puma play in socioeconomic development in Pará and the wider Brazilian mining sector?

Onça Puma has long been positioned not just as a mining asset but as a socioeconomic development hub for Pará. The completion of Furnace 2 reaffirms that role. During construction, 2,500 jobs were created, and in operations the site sustains over 1,800 permanent and contract positions. This has ripple effects across the region, supporting suppliers, logistics companies, and local services.

Beyond employment, Vale has highlighted its investments in health, safety, and environmental stewardship in Pará. Delivering a three-year construction project with no lost-time injuries was emphasized as a benchmark achievement. Environmental licensing has historically been contentious for Onça Puma, but the under-budget, incident-free completion of Furnace 2 suggests that Vale has improved its ability to manage regulatory and community expectations.

At a national level, Brazil is keen to leverage its resource base to position itself as a supplier of critical minerals in a multipolar world. With the United States, European Union, and China all seeking diversified supply of nickel and copper, Vale’s expansion in Pará feeds into broader geopolitical narratives around energy security and supply chain resilience.

Could Vale Base Metals’ nickel growth trigger further M&A or partnerships in the sector?

Industry observers suggest that Vale’s steady progress in nickel could make it a consolidator in the next wave of mining M&A. Nickel assets are increasingly sought after by automakers and battery manufacturers eager to secure long-term supply. While Furnace 2 strengthens Vale’s organic growth, analysts expect the company to remain active in evaluating joint ventures or offtake partnerships that align with its decarbonization narrative.

Vale Base Metals has already highlighted the integration of its nickel and copper strategy, and Furnace 2 provides additional leverage in negotiations with downstream players. If nickel prices stabilize above $20,000 per ton, industry participants believe the conditions could be ripe for further investment flows and strategic partnerships in the Brazilian mining sector.

How the Onça Puma furnace 2 start-up strengthens Vale Base Metals’ strategy in nickel and copper

The commissioning of Furnace 2 at Onça Puma signals more than an operational milestone—it strengthens Vale Base Metals’ credibility as a disciplined project developer, secures Brazil’s place in the global nickel market, and creates a foundation for expanded copper ambitions. For investors, the story blends cost-curve positioning with long-term demand for electrification metals, even as near-term nickel volatility continues to test sentiment.

As institutional flows and analyst commentary suggest, Vale’s nickel business is increasingly viewed as a stabilizing counterweight to iron ore cycles. With a projected 210 kt to 250 kt of nickel output by 2030, Vale Base Metals is positioning itself not only as a top-tier producer but also as a cornerstone of Brazil’s economic development and global supply chain resilience.