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2024-02-12 3:00 PM

Koniambo Nickel to Transition to Care and Maintenance: Glencore plc and SMSP Make Decision

  • Koniambo Nickel, a joint venture of Glencore and SMSP, transitions to care and maintenance due to financial challenges.
  • Glencore to fund the operation during transition, seeking new industrial partner, retains local employees temporarily.
  • Despite French government's support, KNS remains financially unsustainable, prompting Glencore's decision to transition into care and maintenance.
By Lethabo Ntsoane

In a significant move impacting the nickel industry, shareholders of Koniambo Nickel SAS (KNS) have decided to transition the operation into care and maintenance. Koniambo Nickel SAS, a joint venture between Société Minière du Sud Pacifique SA (SMSP) and Glencore plc, made the decision amidst challenging market conditions and high operating costs.

Transition to Care and Maintenance

Glencore plc will lead the funding of the operation during the transition phase, adhering to an agreed budget. As part of this process, the furnaces will remain hot for a period of six months, during which the KNS team will undertake critical activities to maintain the asset’s integrity and ensure site security.

Search for New Industrial Partner

With the transition underway, Glencore is set to initiate a process to identify a potential new industrial partner for KNS. This step indicates a strategic shift in the operational dynamics of the nickel venture.

Background and Decision Context

The decision to transition KNS into care and maintenance follows extensive discussions and negotiations with relevant government stakeholders. Despite efforts by the French government to assist, the operation remains financially unsustainable due to high operating costs and weak market conditions in the nickel industry.

Financial Implications and Historical Context

Glencore plc has been the primary funder of KNS since its acquisition as part of the Xstrata transaction in 2013. Over the years, Glencore has funded billions into the operation without realizing profits. Despite contributing significant economic benefits to New Caledonia, including substantial spending on goods, services, and local salaries, the operation has consistently operated at a loss.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo