Koniambo Nickel is currently in idle warm care and maintenance mode (keeping the equipment and especially the oven heated) and the entire workforce remains until 31st August 2024. After this date, Koniambo Nickel will be put into cold idle with the shutdown of the furnaces and the economic dismissal of all the employees, except for a small team of 150 people, and then 50 people.
Our main concern remains the preservation of the human resource and our ability to exploit our resource. Therefore, we have requested support from the French Government in order to extend the period of warm idle mode and keep the workforce for an additional period of 3 to 6 months.
Indeed, in the process of selling Glencore’s shares in the capital of Koniambo Nickel, three groups have expressed their interest. This process is divided into two phases. After confirming their interest by submitting non-binding offers corresponding to the end of phase 1, they requested a period of 3 to 6 months to carry out the necessary studies and to submit or not a firm offer, the objective of phase 2.
SMSP maintains its efforts to pursue this phase 2, while preserving jobs. No agreement has yet been reached.
The Koniambo site has undeniable assets with the Koniambo mountain, one of the most beautiful ore ressource in the world. Major infrastructures have been built on the site including a deep harbor, power plant, pyrometallurgical plant and 12 km long conveyor. Moreover, this project is based primarily on the support of local populations. The economic benefits, estimated at several hundred million CFP francs, concern employees, subcontractors and all activities related to the development of a life in the VKP zone for the benefit of all populations.
The main weakness of the site is an innovative process that has never achieved a ramp-up, thus allow financial visibility. Compared to other industrial countries, there are higher labor costs and higher legal standards regarding environment. Nevertheless, these two points must be turned into assets by making a finished product that meets all the environmental and human standards that match ISO 26 000 (ESG, Environmental, Social and Governance), and which are sought after by the battery and energy transition sector.
We have never closed the door to partnerships. Before Glencore decided to sell its shares, Koniambo Nickel had offered to supply 450,000 tons of ore annually to SLN. The SLN was studying the proposal. However, the discussions stopped with Glencore’s decision to halt operations.
If Koniambo Nickel’s business resumes, there will be opportunities to discuss again. Ore exchanges for example, depending on the chemical characteristics required by the plants. Regarding that, it is important to highlight that each furnace has its own chemical specifications to comply with, as such, ore supply is not an overnight operation.
Moreover, SMSP’s strategy has always remained clear, namely looking to upgrade the value of mining resource. Our priority is local ore processing to maximize economic benefits for the country. However, for mineral resources that cannot be processed locally, SMSP elected for an offshore plant (mostly owned by Caledonian public interests) instead of exporting it to foreign countries and smelters, without generating spinoffs.
That is the debt that Koniambo Nickel owes to Glencore, a debt owed to a shareholder, not to a bank.
Write-offs are a logical continuation of the process, the result of Glencore’s desire to part from Koniambo Nickel’s shareholding.
SMSP for its part has no debt to Glencore and is not obliged to reimburse Glencore 51% of this amount.
The CTC mixed up social accounts with consolidated accounts. You have to look at SMSP accounts that are filed every year. SMSP owes a debt of XPF 23 billion to its financial partners, which has resulted in an asset value of more than XPF 45 billion.
This XPF 23 billion debt is due to the financial partners of SMSP who were willing to participate in the financing of the Northern plant.
Often, the media oppose us for reasons that are unclear to us.
We are all actors of the nickel economic activity in New Caledonia with different strategic visions.
SMSP meets and works regularly with other nickel companies on many common subjects and issues.
All companies in the nickel sector are required to share, either commercially or technically, and very often regarding regulatory aspects. And as a matter of fact, each of us develops synergies according to its interests in terms of training, recruitment and exploration.
However, each representative of the companies does remain liable individually to manage assets according to the company’s best interests.
Regarding China, we were exploring opportunities, hence the possibility of acquiring a majority stake in a plant in China in partnership with the shareholders of YICHUAN, which would be supplied by the mines of the SMSP group.
While the conclusion of the final transaction was imminent and our subsidiary holding the SMSP’s stake in China had been set up since August 2022, a disagreement arose over the partner’s unexpected request to remove certain liabilities from its liability guarantee.
Like any reasonable and responsible company, we made the decision to end the soon-to-be partnership.
SMSP submitted its safeguard proposal plan to authorities in charged, and it was approved by the Commercial Court in October 2022. The plan has started and we made the first payments as planned.
The profits of SNNC return to New Caledonia in two ways: the sale of the ore which generates the turnover of NMC, which employs, trains and mobilizes subcontractors in Caledonia on an everyday basis. And the dividends paid to SMSP, which are currently used to repay its creditors, mainly the banks that are partners in the financing of the Northern plant. So they’re involved in the development of the North.
Focus is not much about either it must be a “local plant” or an “offshore plant”. Rather, it is the ore grade that determines the choice between local or offshore processing. We’ve always been aware of two things. Low-grade ore requires specific technology and expertise to be cost-effective. We didn’t have it in 2008, and we don’t have it today. For this reason, SMSP turned to POSCO. The Northern plant was built to transform a higher-grade ore.
Our energy transition is first of all based on the Climate Energy Plan of the Northern Province and the Energy Transition Scheme adopted by the Government of New Caledonia (STENC). We do work in coordination and collaboration with the subsidiaries to move them towards greener nickel. Workshops have been set up within each subsidiary to this end.
Initiatives launched are first about assessing the carbon footprint of our businesses, and from there to identify solutions to implement from technical and human aspects. For example, NMC‘s teams focus on optimizing the utilization of cars and trucks to operate, either to dig ore or mobilize employees on sites. For Cotransmine, if possible, this involves installing solar panels or updgrading working methods (reducing the need for equipment to limit unnecessary CO2 emissions).
Broadly, NMC, Cotransmine, and SMSP have developed proactive policies on revegetation, waste management, and monitoring air and water quality. These initiatives stem from regulatory obligations, and are extended and deepened beyond legal requirements wherever possible.
We are also working with Koniambo Nickel to reduce our environmental footprint. This requires a lot of research, the main one aiming to replace coal used for operation.
It’s a non-renewable resource, so yes, it’s exhaustible. That is also why we need to optimize the operations and upgrade the value for the return of profit to the country. For the future, we must anticipate it, but it is no longer up to the industrialists. It is a political responsibility, a duty to anticipate.
It’s a complex question because it changes over time as technologies progress. Twenty years ago, no ore which was under 1.4% nickel contained was processed. Today, it is known that plants can process ore containing only 0.9% nickel. We still have decades of exploitation ahead of us.
