The Swiss mining giant Glencore says it will halt production and divest its share in New Caledonia's Koniambo nickel operations following a significant drop in the price of the metal – a vital component in stainless steel and electric car batteries.
On Monday Glencore said it was seeking a new industrial partner for the nickel mine and processing plant. The operations will be closed, with the possibility of resumption if a new financial supporter is found.
This decision deals a massive blow to the French government's efforts to assemble a rescue package for New Caledonia's nickel industry – a substantial employment sector that accounts for 7 percent of the territory's economic output.
Glencore holds a 49 percent stake in Koniambo Nickel SAS (KNS.) The other partner is the local Société Minière du Sud Pacifique SA (SMSP.) It cited high operating costs and unfavorable market conditions as reasons for the unprofitability of operations.
"Glencore will fund the operation according to an agreed budget as it begins an orderly transition to a state of care and maintenance," it said in a press release.
"The furnaces will remain hot for six months, and the KNS team will support the critical activities required to maintain the integrity of the asset and keep the site secure."
Apart from increasingly elevated operational costs, the nickel industry faces an influx of supply from Indonesia, the world's leading producer of the industrial metal.
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