LONDON – Brazil's Vale plans to exit its troubled New Caledonia assets but still aims to ramp up nickel output ahead of rising demand for electric batteries, executives said on Wednesday.

The planned divestment of nickel operations in New Caledonia comes after Vale said last month it would write down the mine and incur a non-cash impairment charge of about $1.6-billion in the fourth quarter.

A year ago, the world's top nickel producer unveiled plans to invest $500-million in the mine after failing to find a partner for the operation.

But on Wednesday, CFO Luciano Siani said Vale had decided to exit the operation, which has been beset by technical setbacks, a chemical spill and violent protests.

"We realised we don't have the competence to raise the production levels with this technology to where we want it to be. We realise that others may have this competence," he told an investors' presentation in London.

Siani said Vale was examining all options in how to exit the unit and would make a decision in the first half of next year.

Last year, Vale's New Caledonian operations produced 32 500 t of nickel, down from 40 300 t in 2017.

The company remained bullish on nickel. It aims to boost production of the metal by about 70% in coming years to 360 000 t/y, mainly by expanding in Indonesia, said Mark Travers, Vale's interim executive director for base metals.

"Nickel is poised for dramatic change," he told investors, but did not specify a date for the higher production target.

While there is an oversupply of high quality nickel, the market is due to tighten in coming years as electric vehicle sales climb, Travers said.

The metal is currently mainly used as an alloy to make stainless steel, but it is a key component in electric vehicle batteries.

Vale has two nickel projects on the drawing board in Indonesia being developed with joint venture partners, Travers said.

The Bahodopi project is due to produce 70,000 tonnes a year of ferronickel and is being developed with Chinese partners.

Vale is also working with Japan's Sumitomo Metal Mining in Pomalaa for a processing plant aiming for 40 000 t/y of nickel output suitable for batteries.

Travers also said Vale aimed to increase copper output to 480 000 t by 2023, up 20% from an estimated 400 000 t next year.