Glencore to Sell Stake in Koniambo Nickel Venture Amid Continued Losses
Mining giant Glencore is looking for a buyer for its stake in the Koniambo Nickel joint-venture, as the project faces mounting losses due to falling nickel prices. Glencore plans to transition the New Caledonia-based Koniambo Nickel to a care and maintenance status, with a six-month winding-down period.
Glencore holds a 49% stake in the venture and will begin the search for a new industrial partner. The company had previously announced it would stop funding KNS by the end of February. “Even with the proposed assistance [from the French government], KNS remains an unsustainable operation and Glencore cannot justify continuing to fund losses to the detriment of its shareholders,” said the diversified miner.
This decision follows Trafigura’s announcement last month that it would cease funding for a major nickel operation in New Caledonia. The French territory has been hit hard by increased supply from Indonesia, causing nickel prices to drop by 42% over the past year and leading to mine closures and production halts across the industry.
Although efforts have been made to reduce supply, Wood Mackenzie analysts predict that nickel prices will continue to decline. HSBC analysts also see a surplus of nickel in the medium term. Glencore has invested over $4 billion in KNS since acquiring it in 2013 as part of the Xstrata merger, but the project has never turned a profit.
Citi analysts estimate that the halt of the Koniambo Nickel project, which produced around 27,000 metric tons of nickel in 2023, will not have a significant impact on the overall nickel market. Societe Miniere du Sud Pacifique holds the remaining 51% stake in KNS.
Analyst comment
Negative news. Glencore’s decision to sell its stake in the Koniambo Nickel joint-venture indicates the project’s mounting losses and the impact of plummeting nickel prices. With the search for a new industrial partner, the market is expected to face continued challenges as nickel prices are predicted to decline further. However, the project’s halt is not likely to have a significant impact on the overall nickel market.
