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Tough times for nickel

ON the London Metals Exchange, the price of nickel has been on a rollercoaster. With slowing demand from China, the LME price has nearly halved since 2011. This poses major challenges for New Caledonia, which holds more than 20 per cent of global nickel reserves.

To break the long-held monopoly of the Doniambo smelter in Noumea, managed by ERAMET-SLN, two new smelters have begun production in New Caledonia in recent years: the Goro plant in the southern province (run by Brazil’s Vale corporation) and the Koniambo smelter in the north (a joint venture between Glencore and the Northern Province’s SMSP).

All of these companies are facing serious difficulties around debt, share prices and technology, compounded by the lower global price for nickel. On 29 October, ERAMET officially reported a 33 percent reduction in revenues for nickel operations over the third quarter, in comparison to the same period in 2014 – a drop of 71 million euros. ERAMET’s capital value on the French stock exchange has dropped to around 1 billion euros, from 17 billion euros in 2007.

At the conclusion of the ERAMET board meeting in October, managing director Patrick Buffet said: “Given the particularly deteriorated market conditions, the Board of Directors has decided to limit industrial investments and to suspend the ERAMET group’s major projects.” 

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