By Christian Moess Laursen
Glencore said it is looking for a buyer for its stake the Koniambo Nickel joint-venture in New Caledonia, given continued losses of the operations amid slumping nickel prices.
The Anglo-Swiss mining giant said Monday that it will transition Koniambo Nickel–or KNS–to a care and maintenance status.
Glencore will then search for a new industrial partner for the venture, in which it has a 49% stake. In September, the miner said it would stop funding by the end of February.
“Even with the proposed assistance [from the French government], KNS remains an unsustainable operation and Glencore cannot justify continuing to fund losses to the detriment of its shareholders,” the diversified miner said.
The decision echoes that of peer Trafigura last month, when it said it would stop funding for a major nickel operation, also in New Caledonia. The French territory in the South Pacific was once seen as the future of nickel production.
Just 18 months ago the nickel market was running hot and Australian giant BHP struck a deal with Tesla to supply it with the key element for electric vehicles. However, a flood of new supply from Indonesia has sent prices crashing.
Over the last twelve months, prices are down 42%.
For over ten years, Glencore has been the primary funder of KNS without ever realizing a profit. More than $4 billion has been invested by Glencore since 2013, when it bought the operation as part of the Xstrata merger, it said.
Write to Christian Moess Laursen at [email protected]
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