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 State Territorial Audit Chamber CTC (Chambre Territoriale des Comptes) has mixed up the company’s accounts and its consolidated accounts. One needs to refer to SMSP’s accounts which are filed every year. SMSP’s debt to its financial partners is XPF 23 billion, which is the source of an asset value of more than XPF 45 billion.
This debt of XPF 23 billion is due to SMSP’s financial partners who wished to participate in the financing of the Northern Plant (Usine du Nord).
We are often pitted against each other by the local media for unidentified reasons.
We are all nickel operators in New Caledonia with different strategic visions.
SMSP meets and works regularly with other companies in the sector on many issues.
All the nickel sector companies have to exchange information, either on a commercial or technical level, and very often on a regulatory level. Moreover, each company develops synergies according to its interests in terms of training, recruitment and exploration.
For all that, each company remains the manager of its own business and defends its own interests.
With regard to China, we were exploring economic opportunities, in this case the possibility of acquiring a majority stake in a plant in China in partnership with the shareholders of YICHUAN, which would be supplied by SMSP Group Mines.
While the conclusion of the definitive transaction was imminent and our subsidiary holding SMSP’s shareholding in China had been set up in August 2022, a disagreement arose over the partner’s unexpected request to remove certain liabilities from its liability guarantee.
Like any reasonable and responsible industrialist, we had the decision to hold on the preliminary partnership requirements.
The safeguarding plan process, anticipated by SMSP was submitted and approved by the NC Commercial Court in October 2022. The Group has already started to honour accordingly the processed plan.
SNNC’s returned profits or earnings to New Caledonia are in two ways: through the sale of ore, which generates turnover for NMC, which employs, trains human resources and supports subcontractors in New Caledonia. And the dividends paid to SMSP, which are now used to repay its creditors, mainly the banks involved in financing the Northern Plant (Usine du Nord). They therefore contribute to the development of the North.
It’s not so much a question of ‘local plant’ and ‘foreign plant’. It’s further based on the category of ore which determines the choice the construction of onshore or offshore processing units. Low-grade ore requires specific technology and expertise to be processed with profitably. We didn’t have much choice in 2008, and it’s still not the case today. That explains SMSP partnership with POSCO, while the Northern Plant was built to process locally higher-grade ore.
Our ecological transition is first and foremost an energy transition based on the Northern Province’s Climate and Energy Plan as well as on the Energy Transition Plan adopted by the Government of New Caledonia (STENC). We are working in coordination and consultation with our subsidiaries helping them moving towards a “greener nickel conduct”. Working groups have been set up within each subsidiary to this end.
The initiatives primarily involve assessing the carbon footprint of our business activities, and then identifying the technical and human solutions to be implemented. At NMC, for example, the teams are working together to optimise staff and lorry movements. At Cotransmine, wherever possible, the aim is to install solar panels or to work on work techniques (less strain on equipment to limit needless CO2 emissions).
On a broader scale, NMC, Cotransmine and SMSP have developed proactive policies in terms of revegetation and waste management, as well as monitoring their air and water quality indicators. These initiatives have their origins in regulatory obligations, and are extended and deepened beyond legal requirements whenever possible.
We are also working with Koniambo Nickel to reduce our footprint. This involves a number of studies, the main one of course being the replacement of coal.
Nickel ore is a non-renewable resource, so yes, it’s exhaustible. That’s also why we need to start optimising its management and recovery today to maximise the economic returns for the country. As for the future, we need to anticipate it, but that’s no longer a matter for industry. It’s a political responsibility, a duty to anticipate.
That’s a complex question, because it changes over the years and with technology. 20 years ago, we didn’t process nickel ore of less than 1.4% grade. Today, our plants can process nickel ore of grade of 0.9%. The company still have several decades of mining ahead.