By Patrick Decloitre, RNZ Pacific correspondent French Pacific desk
New Caledonia’s mothballed nickel plant in Koniambo (north of the main island of Grande Terre) has announced it has started mass sackings of some 1200 staff, despite efforts to identify a potential buyer.
Koniambo (KNS-Koniambo Nickel SAS) operations had already been mothballed after the announcement, in February, from its major financier, Anglo-Swiss giant Glencore, that it wanted out.
KNS is jointly owned by Glencore (49 percent) and New Caledonia’s Northern province (51 percent).
While making the announcement, Glencore signalled a 6-month delay in the implementation of its decision, including payment of salaries.
The same timeframe was also supposed to be used to find potential buyers for the shares owned by Glencore.
Glencore said in February that keeping its stake in KNS was no longer sustainable.
It also recalled that the plant, in more than 10 years of existence and operation, had never made a profit.
Staggering debt
Over the past decade, KNS had accumulated a staggering 13.5 billion euros (NZ$25 billion) in debt.
As the August 31 deadline looms at the end of the six-month respite, what had been the symbol of New Caledonia’s Northern province empowerment and wealth “re-balancing” of the French Pacific archipelago’s provinces is now faced with a bleak reality.
Koniambo’s wealth relies on the Tiébaghi nickel massif, believed to hold about one quarter of New Caledonia’s nickel reserves.
Koniambo: a highly political symbol
KNS was born from a political and financial deal, including France — the “Bercy Accord” signed in December 1997, just months before the political Nouméa autonomy Accord was signed in 1998.
The deal was de facto enacting the transfer of the Tiébaghi massif to New Caledonia’s Northern province and its financial arm, the Société Minière du Sud Pacifique (SMSP).
It was the financial translation of the will to restore some balance between the affluent Southern Province and the less favoured Northern Province of New Caledonia, mostly populated by the indigenous Kanak community.
Since the Koniambo project and its construction started, the new activity has had a stimulating effect on the whole region, especially in the small towns of Voh, Koné and Pouembout.
The number of local companies increased, as well as the population.
In announcing the official lay-offs on Friday, KNS still wanted to appear optimistic: “Even though we are pursuing the search process for a potential buyer, and that three groups continue to display an interest for our company, we do not have at this stage a finalised offer”, the company admitted.
“We are therefore compelled to go ahead with the collective lay-off process on economic grounds”.
‘Cold’ sleep process
Beyond August 31, only a group of about 50 workers will remain employed in maintenance work on what will then be described as “cold” sleep process.
“But the fact that three world-class groups are still in discussions show that Koniambo Nickel still represents a strong interest for potential takeovers”, an optimistic KNS vice-president Alexandre Rousseau, told public broadcaster NC la 1ère on Saturday.
On top of the wave of sackings announced by KNS, some 600 contractors relying on the plant’s activities have also lost their jobs since February.
Local unrest – world nickel crisis
The announcement comes as New Caledonia’s economy is in a critical situation.
It has suffered a major blow, on top of an already grave financial situation.
Since May 13, violent unrest has been ongoing in New Caledonia, with a backdrop of protests against French-proposed modifications of voters’ eligibility for provincial elections, regarded by pro-independence movements as a bid to reduce the political voice of the indigenous Kanak community.
Since the riots, destruction, looting and arson began, more than 700 businesses have been destroyed, 10 people killed (eight civilians and two French gendarmes), and the overall cost of the unrest has topped 2.2 billion euros (NZ$4 billion).
During the riots and unrest, nickel mining sites have been specifically targeted several times.
Entire nickel sector in crisis
New Caledonia’s nickel industry has also been in profound turmoil over past years.
Its other two plants — in the Southern province (Prony Resources) and historic operator Société le Nickel (SLN) in Doniambo near Nouméa — owned by French mining giant Eramet — are also on the verge of collapse.
The situation comes from a world nickel market now dominated by Indonesian units, which have started to produce nickel in mass quantities and at a much lower price.
The result was a collapse of the world nickel price — it slumped by 48 per cent in 2023.
New Caledonia’s production, in this context, was also regarded as too expensive, prompting efforts for a deep reform, especially on the cost structure such as electricity.
A French assistance plan proposed in 2023 by French Finance Minister Bruno Le Maire, including a 200 million euro (NZ$367 million) package, was declined by local authorities, who said too much was being asked by France in terms of strings attached to the massive funding loan.
The French-proposed reform also intended to diversify New Caledonia’s nickel buyers from an almost-entire reliance on Asian clients and instead turn to more European buyers, mostly car manufacturers for the purposes of production of batteries for electric cars.
Other plants on the verge of collapse
As a result of the combined effects of the current situation (the ongoing riots and the pre-existing nickel crisis), Prony Resources’ operations are at a standstill.
Eramet, which in recent months had made no secret of its desire to disengage from SLN, earlier reported a net loss of some 72 million euros (NZ$133 million) for the first half of the financial year.
New Caledonia’s nickel industry is believed to employ about 25 percent of the French Pacific archipelago’s workforce.
This article is republished under a community partnership agreement with RNZ.
