12th Feb 2024 09:58
(Alliance News) - Glencore PLC on Monday said it could no longer fund the loss-making Koniambo Nickel SAS joint venture.
Koniambo Nickel SAS is a nickel mine and processing plant on the islands of New Caledonia, owned 51% by Societe Miniere du Sud Pacifique SA and 49% by Glencore.
Glencore, the Barr, Switzerland-based diversified mining group, said the operation would begin an orderly transition to a state of care and maintenance.
The decision follows several months of extensive discussions and negotiations with relevant government and other key stakeholders.
Even with the French government's proposed assistance, high operating costs and current very weak nickel market conditions means KNS remains an unprofitable operation, Glencore said.
Glencore said the search for a new industrial partner for KNS would begin shortly.
Glencore pointed out it had invested more than USD4 billion since acquiring the operation as part of the Xstrata transaction in 2013, and a total of USD9 billion since project inception.
While appreciative of the French government's efforts to revitalize and rescue the nickel industry in New Caledonia, Glencore explained KNS remains an unsustainable operation and it cannot justify continuing to fund losses to the detriment of its shareholders.
In September, Glencore said it would only provide funding for the KNS operation until February 29.
Shares in Glencore rose 1.0% to 388.90 pence in London on Monday. In Johannesburg, shares were up 1.0% to ZAR93.41.
By Jeremy Cutler, Alliance News reporter
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