Glencore Plc said on Wednesday it will stop funding the loss-making Koniambo Nickel SAS (KNS) business it co-owns in New Caledonia at the end of February, adding to pressure on the troubled nickel sector in the French Pacific territory.
The commodities miner and trader, which has funded KNS with $9 billion since its inception, said it will work with the company, its joint shareholder and the French government to explore solutions for ongoing losses, including looking at alternative sources of funding.
The French government is currently overseeing discussions to reorganise the nickel industry in New Caledonia, which has some of the world’s largest reserves of the metal, but whose three smelters have faced years of losses linked to high costs and social unrest.
French mining group Eramet, the majority owner of SLN, another New Caledonian nickel producer, has said previously it will not provide further financing for the unit.
The French government granted SLN a 40 million euro ($42.17 million) emergency loan earlier this year to avert a financial collapse.
Glencore has a 49% stake in KNS alongside the northern provincial authorities in New Caledonia.
($1 = 0.9486 euros)
(By Deep Vakil and Gus Trompiz; Editing by Toby Chopra and Sharon Singleton)
