Glencore Xstrata, Vale in talks over Sudbury nickel operations

Glencore Xstrata PLC and Vale SA are in preliminary talks about combining their nickel mine operations in Sudbury, Ont., reports said Friday.

Citing sources, the Globe and Mail newspaper and Reuters news agency said the two companies have begun "exploratory" discussions as part of an effort to cut costs.

Vale declined to comment when asked about the report, while Glencore was not immediately available for comment.

Nickel prices, which started the year close to $8 per pound, have fallen to trade around $6 to $6.50 per pound in recent weeks.

Vale, which is based in Brazil, owns the former Inco Ltd. nickel operations in Sudbury that it bought in 2006, while Xstrata holds the former Falconbridge Ltd. operations that it acquired the same year.

The takeover deals followed a failed attempt by Inco and Falconbridge to merge with copper producer Phelps Dodge Corp.