Talks with potential buyers for Glencore’s stake in Koniambo Nickel SAS are reportedly ongoing. 

Glencore has been on the search for a buyer for its stake in Koniambo Nickel SAS (KNS) following a decision to suspend operations at the mine and processing plant in New Caledonia in February. At the time, Glencore stated that furnaces would remain ‘hot’ for a period of six months, allowing for a quick restart of the operation if a new backer were to have been found during this time. Given that this period has elapsed, the loss-making New Caledonian nickel producer made the move to close the furnaces making most of the 1,200 staff redundant.

The Koniambo smelter is located in the North Province of New Caledonia and was officially inaugurated in November 2014. The operation comprises an open-cut nickel mine and a pyrometallurgical plant with capacity to produce 60ktpy Ni-in-ferronickel, although owing to operational difficulties, it has never achieved anywhere near nameplate capacity. Last year Koniambo produced 27.2kt Ni-in-ferronickel. The plant has been operated by KNS, a 51:49 JV between Société Minière du Sud Pacifique (SMSP) and Glencore.

The news is a big blow for New Caledonia and France, given the importance of nickel to the local economy. This year, New Caledonia has endured some of the worst unrest since the 1980s, with the French government deploying police and military reinforcements to regain control. The country is a significant producer of refined and intermediate nickel products.

Despite French government support, New Caledonia’s nickel operations suffer from high energy costs, and like the rest of the industry, have come under increasing competition from lower-cost Indonesian nickel supply.