NEW YORK (TheStreet) -- Shares of Vale SA (VALE) are down -1.19% to $12.90 in active trading today as the Brazil-based metals and mining company and Glencore (GLNCY) broke off talks over combining their nickel assets in Canada in a deal that could have produced over $1 billion in annual cost savings, sources told Reuters.
The discussions over linking the two companies' neighboring nickel mining and processing facilities in the Sudbury basin in southeast Canada broke down partly due to disagreement over how to share the costs and savings and to worries about government and labor union reaction to potential job cuts and shutdowns, the sources said, adding that recovery in nickel prices has made cost rationalization less pressing.
"Both sides more or less agreed on what the optimum structure of a combined Sudbury business would look like, but to enable that to be created, very difficult decisions needed to be taken, and the appetite or the ability to take those decisions was not there," according to a Reuters source.
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Shares of Glencore are up 0.95% to $12.06.
TheStreet Ratings team rates VALE SA as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate VALE SA (VALE) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity."