The New Caledonian ferronickel operation will also be placed on care and maintenance amid the steep decline in nickel prices.

Glencore is searching 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. Glencore announced that it will fund the operation according to an agreed budget, while it transitions it to care and maintenance. The furnaces will remain hot for a period of six months, which would allow for a quick restart of the operation if a new backer can be secured.

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 represents a big blow for New Caledonia and France, given the importance of nickel to the local economy. In September 2023, Glencore informed the board of KNS that it would only provide funding for Koniambo until 29 February 2024. During this time, it would also work with KNS and relevant stakeholders to explore solutions for the operation’s ongoing losses, including alternative sources of funding. The French government had offered support by providing relief on energy bills in the region of €200M (US$216M) per year but urged shareholders to do more to make the operation profitable.

The development isn’t particularly surprising given the recent high-profile slide in nickel prices and challenging operating environment that has resulted in closures and reduced output at Western Australian nickel operations. 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, while demand has been sluggish.

Eyes will now turn to Trafigura and French mining company Eramet, which both operate separate nickel processing plants on New Caledonia and are exposed to the high-cost environment.