It's a cold shower in New Caledonia.
The Glencore group confirms its decision to withdraw from the Koniambo Nickel (KNS) plant.
“After several weeks of discussions between SMSP, Glencore, the management of Koniambo Nickel and the State, no alternative financing solution acceptable to Glencore could be found,”
explains the Swiss giant.
The group had in fact discussed this possibility as early as September.
The government quickly took up the subject, as the issue is so sensitive.
This factory north of Caillou was designed to rebalance jobs and wealth between the two parts of the island, the northern part being less developed.
There is therefore no question for the local government, as for the metropolis, of letting this happen.
Glencore, which bought Xstrata's stake in KNS in 2013, explains that it
"can no longer finance the losses (in KNS) to the detriment of its shareholders."
If 51% of the factory is owned by the Société minière du Sud Pacifique (SMSP), itself mainly owned by the northern province of the archipelago, the raw materials giant is a 49% shareholder.
But he finances most of it.
In ten years, Glencore estimates having spent more than 4 billion dollars and
“more than 9 billion since the start of the project”.
“Even with the proposed aid, KNS remains unprofitable.”
And has accumulated 14 billion euros in debt.
Lack of competitiveness
As part of negotiations carried out for several months with Glencore, the French State proposed a series of measures, initially in the form of financial support.
They included an energy price subsidy of around 60 million euros for KNS
,
as well as the possibility for the company to export raw ore.
Defending the processing of ore on site, the doctrine advocated by the separatists prevents the export of raw ore, a profitable activity.
This exceptional measure should allow the group to free up 35 to 40 million euros per year in additional resources.
The sum was intended to compensate for the lack of competitiveness of the New Caledonian site in the face of Indonesian competition, which produces nickel under less strict environmental and social conditions than on Caillou.
Finally, the State had proposed setting up a loan of 100 million euros for residual financing needs.
Not enough to make the Swiss group waver, anchored in its decision.
Read also: Indonesia, rich in nickel, rebounds thanks to raw materials
Glencore nevertheless announced some more consensual measures, such as maintaining the employment and salaries of all 1,300 local Koniambo Nickel employees for six months and mothballing the facilities.
The measure consists of keeping the installations “hot”, even if they are not used, for six months.
Enough to facilitate a possible restart.
This transition phase should allow stakeholders to find a buyer.
But, here too, the matter is thorny.
Nickel is part of the list of critical metals established by the European Union.
It is notably used in the composition of the batteries that industry will need to ensure the energy transition, whether for electric vehicles or larger storage systems.
However, among the natural buyers could be Chinese groups.
We need a “credible buyer with a profitable project that is supported by an industrialist”
Bruno Le Maire's office
As part of the Nickel Agreement, still under discussion with stakeholders, the government supports the search for a buyer for the site, with
"two limits"
, reports the office of Bruno Le Maire, the Minister of the Economy.
We need a
“credible buyer with a profitable project that is supported by an industrialist”.
Investment funds, abstain.
Decarbonize
electricity
_
The Nickel Agreement carries a common vision between local stakeholders and the State, based on profitable exploitation of the white metal in New Caledonia.
This involves maximizing the added value created on site, during extraction operations but also during ore refining.
The latter must also be used to supply Europe, which is not yet the case.
Access to the resource must also be improved, with a review of exploitation and export rules, in order to improve the competitiveness of factories that locally process the ore.
An expert mission was also set up, in agreement with the Energy Regulatory Commission (CRE) and the government of New Caledonia, in order to define the energy infrastructure that the territory would need to decarbonize its electricity and reduce costs.
The point is absolutely fundamental for this electro-intensive industry.
The three metallurgical factories processing nickel extracted on the archipelago (including that of KNS) are in the red.
The possibility of installing a small modular nuclear reactor (SMR) is regularly mentioned by members of the government.
But nothing can be envisaged before 2030 - at the earliest - since this technology still needs to be developed!
In the meantime, other solutions must be found.
Which is difficult.
Given the electricity needs of the sector, renewables alone are, in the current state of the art, not able to provide this.