Glencore to halt nickel mine production after prices drop

GLENCORE is to halt nickel production at a South Pacific mine after prices for the battery metal were pushed lower by a slowdown in electric vehicle sales and a glut in global supplies.

The FTSE 100 commodities giant said yesterday the Koniambo mine and processing operation in New Caledonia, a French island territory between Australia and Fiji, was “unprofitable” and could no longer be sustained.

The company is now seeking to offload its stake in the troubled business, which it acquired as part of a £56bn merger with Xstrata more than a decade ago.

The price of nickel plunged from a peak of more than $100,000 (£79,000) a tonne in 2022 to around just $16,000 more recently, after production of the metal boomed in Indonesia and China.

Prices have also been hit by a slowdown in demand for electric cars.

With the slide causing trouble for New Caledonia’s nickel industry, the French government has been trying to convince miners to continue their operations with a rescue package. It had offered around €200m (£170m) in state support to Koniambo Nickel SAS (KNS), the joint venture in which Glencore owns a 49pc share. French mining group Société Minière du Sud Pacifique (SMSP) owns the rest.

However, Glencore said it had already sunk $4bn into the business and that it would remain unviable even with the French support. The company said: “The furnaces will remain hot for six months, and the KNS team will support the critical activities required to maintain the integrity of the asset and keep the site secure.

“Glencore is appreciative of the French government’s efforts ... however, even with the proposed assistance, KNS remains an unsustainable operation and Glencore cannot justify continuing to fund losses.”

The company said it would “shortly” begin looking for a new partner to take over its interest in KNS and said employees would be kept on for at least six months to aid the transition.

It came as Indonesian and Chinese suppliers were expected to cut nickel output. They account for 70pc of global supplies. The glut is mostly in nickel pig iron, a cheap alternative to high-grade nickel used to make stainless steel.