France sets end March deadline for New Caledonia nickel deal

21st March 2024

By: Reuters


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French Finance Minister Bruno Le Maire on Thursday set an end of month deadline for New Caledonia to back a state bailout deal for the French territory's nickel industry, ruling out an improved offer.

The French government has been holding talks to salvage the South Pacific territory's loss-making nickel industry and has drawn up a deal to continue providing support.

"I'm calling for the nickel pact to be signed by the end of March ... as it was drafted," Le Maire told journalists. "Let there be no ambiguities, there is no question of changes."

New Caledonia President Louis Mapou has criticised the deal as being insufficient, but has nonetheless put it to the territory's congress for a vote on March 28.

Under the proposed deal, the French state would in particular subsidise energy prices alongside local authorities up to 200 million euros a year and invest in electricity production benefiting local nickel plants.

With local producers facing cheaper competition from Indonesia, the state aid would help lower their production costs and allow them to become profitable, Le Maire said.

The nickel firms would also commit to supplying more of their output to Europe, Le Maire said, as the region tries to secure minerals such as nickel to make electric vehicle batteries.

New Caledonia has three nickel processors - KNS, Prony Resources and SLN - that have been on the verge of collapse due to high costs, political tensions and weak international prices linked to Indonesian competition.

Mining group Eramet, the majority shareholder of SLN, this month reached an agreement with Paris to remove from its balance sheet hundreds of million of euros of debt related to SLN.

Paris had been seeking to finalise a deal with the nickel companies and local authorities in January to overhaul the industry but an agreement has proved elusive, partly due to parallel negotiations over constitutional reform.

France has offered loans to help avert the collapse of the nickel processing firms. But Eramet has refused to inject more funds into SLN while KNS co-owner Glencore GLEN.L last month suspended output at the KNS processing plant while it seeks a buyer for its stake.

Edited by Reuters



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