ASIATODAY.ID, JAKARTA – Global mining company, Glencore will sell its shares in Koniambo Nickel SAS (KNS) in New Caledonia. Production at the KNS processing plant will be halted for six months while new investors are sought to overcome the loss-making business.
France has entered into negotiations to save the nickel industry in New Caledonia. France said last week that it had offered the KNS state support of around 200 million euros.
“Even with the French government’s proposed assistance, high operational costs and very weak nickel market conditions currently mean KNS operations remain unprofitable,” Glencore said in a statement quoted by Reuters, Tuesday, February 13, 2024.
KNS is a joint venture between Glencore and New Caledonia-controlled Societe Miniere du Sud Pacifique SA (SMSP). High costs and political tensions in the country, plus competition said to originate from Indonesia, have left three processing plants in French territory on the verge of collapse.
Local officials emphasized that the government’s position is the same, namely that industry players must invest in KNS and other New Caledonian nickel processors. In this case, France does not rule out the possibility of Chinese investors.
Last year, Glencore said that it would only finance KNS, in which it owns a 49% stake, until the end of February. His party will fund KNS during the six month period when production is stopped.
While production is stopped, the factory will remain under care and maintenance. The factory furnaces will remain hot to maintain site continuity and all local KNS employees will be retained.
The move to halt production will allow Glencore to avoid losses to core earnings (EBITDA) of up to $400 million, with possible annual savings from 2025. (ATN)
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