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12 Feb, 2024 11:27

Glencore to close unprofitable New Caledonian nickel mine

dl glencore plc glen basic materials basic resources industrial metals and mining general mining ftse 100 premium 20230328 1817
GlencoreSharecast graphic / Josh White

Mining and commodities giant Glencore has announced that it is calling time on its Koniambo Nickel SAS (KNS) mine in New Caledonia after having invested more than $4bn into the project over the past decade without seeing a return.

The mine, which is a joint venture between Société Minière du Sud Pacifique and Glencore, who own 51% and 49% stakes respectively, is now being transitioned into so-called "care and maintenance".

Glencore said it will continue to fund the operation according to an agreed budget, and the furnaces will remain hot for six months, as it starts a process to identify a potential new industrial partner.

"This 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 in a statement.

Glencore has held the KNS asset since its acquisition of Xstrata back in 2013, being the primary funder "without ever realising a profit", while the mine has contributed $5.6bn in economic benefits to New Caledonia (since 2012).

The FTSE 100-listed company said it is appreciative of the French government's efforts to revitalise and rescue the nickel industry in New Caledonia, but added that, "even with the proposed assistance, KNS remains an unsustainable operation and Glencore cannot justify continuing to fund losses to the detriment of its shareholders."

Glencore, which was trading more or less flat after markets opened on Monday, rose 1.3% on the news by mid-morning at 390p by 1125 GMT.


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Pilling and Co Stockbrokers Ltd. is not responsible for the content or accuracy of third party news articles and we may not share the views of the author or publisher.

We provide third party news for your convenience and information only and make no representation or endorsement whatsoever and hereby exclude all liability for any loss or damage that may be incurred by you as a result of your access or use. Please note that third party content may be subject to terms and conditions imposed by the third party owner of that content.

The value of investments can fall and you may get back less than you invested.