Glencore plc, a major producer and marketer of commodities, has announced the decision to transition its joint venture, Koniambo Nickel SAS (KNS), into a state of care and maintenance. The shareholders, including Glencore, have agreed to fund the operation according to an agreed budget as it begins an orderly transition. The decision follows extensive discussions and negotiations with relevant government and stakeholders, as KNS remains an unprofitable operation due to high operating costs and weak nickel market conditions.
The transition will involve keeping the furnaces hot for six months, with the KNS team supporting critical activities to maintain the asset's integrity and site security. Glencore will also initiate a process to identify a potential new industrial partner for KNS. All local KNS employees will be retained for six months to aid in the transition. Glencore has been the primary funder of KNS, contributing over US$4 billion since 2013, without realizing a profit. KNS has contributed approximately US$5.6 billion in economic benefits to New Caledonia since 2012.
Despite the French government's proposed assistance to revitalize the nickel industry in New Caledonia, KNS remains an unsustainable operation. Glencore expressed its appreciation for the efforts but stated that it cannot justify continuing to fund losses to the detriment of its shareholders. The company is committed to reducing its industrial emissions and contributing to the global effort to achieve the goals of the Paris Agreement.
Glencore is one of the world's largest global diversified natural resource companies, with a strong footprint in over 35 countries. The company's marketing and industrial activities are supported by a global network of more than 40 offices. Glencore's customers are industrial consumers, and the company also provides financing, logistics, and other services to producers and consumers of commodities.