The Koniambo Nickel SAS (KNS), a joint venture (JV) between Société Minière du Sud Pacifique SA and Glencore in New Caledonia, will transition into care and maintenance, it was announced on Monday.
Glencore, which acquired the operation as part of its 2013 Xstrata transaction, said that high operating costs and the current weak nickel market conditions meant that KNS remained unprofitable.
“Glencore is appreciative of the French government’s efforts to revitalise and rescue the nickel industry in New Caledonia; however, even with the proposed assistance, KNS remains an unsustainable operation and Glencore cannot justify continuing to fund losses to the detriment of its shareholders,” the Swiss-headquartered company said in a statement on Monday.
For more than a decade, Glencore has been the primary funder of KNS without ever realising a profit.
The company said it would initiate a process to identify a potential new industrial partner for KNS.
The major would fund KNS according to an agreed budget as the operation transitioned to a state of care and maintenance.
The furnaces would remain hot for six months, and the KNS team would support the critical activities required to maintain the integrity of the asset and keep the site secure.
All local KNS employees will be retained for a period of six months to aid in the transition.
Low nickel prices are pushing nickel miners to halt or slow down projects as they look to cut down on costs and protect margins amid a rapid decline in prices owing to increased supply from Indonesia.