A significant nickel operation in New Caledonia, supported by Trafigura Group, is seeking a new investor after the trading giant declined to contribute additional funds as part of a French government rescue package for the struggling local mining industry.
The French territory, once touted as the future of nickel production, has faced challenges, including technical mishaps and high costs, leading to a rapid increase in pressure on the industry over the past year amid a more than 40% drop in nickel prices.
The French government has engaged in discussions with key shareholders, including Trafigura, Glencore, and Eramet, to formulate a rescue deal for the industry, a critical employer in the region.
Trafigura’s refusal to provide fresh capital for Prony Resources Nouvelle-Caledonie, which it partially owns and houses the Goro mine, means Prony must secure a new investor to qualify for a government bridging loan. Similar arrangements are being considered for Societe Le Nickel, where Eramet holds a majority stake.
While the French government is offering approximately 200 million euros in relief on energy costs for the New Caledonian nickel industry, the total financing need for the territory’s three nickel companies is estimated at 1.5 billion euros.
The local plants, grappling with high energy costs and social unrest, now face increased competition from Indonesian smelters, contributing to the plummeting nickel prices.
Glencore is contemplating mothballing the Koniambo Nickel plant while continuing ore exports, potentially impacting up to 1,000 jobs.
Trafigura, holding 19% of Prony Resources Nouvelle-Caledonie, remains at a crucial juncture as discussions unfold amidst the industry’s challenges.
