MINING
New Caledonia is the 4th largest producer of nickel ore in the world (being Indonesia, the Philippines and Russia) having produced 220 000 metric tonnes in 2019. This industry accounts for 90% of New Caledonia's exports and represents 1 out of every 5 jobs on the island. The peridotite massifs cover 1/3 of the surface of the Mainland and represents close to 30% of the world's nickel resources.
Sources: SMSP, Statistica
Lower activity and strategic changes in the nickel industry
In 2019, global LME stocks fell sharply (-57.3% at the end of 2019), reaching their lowest level since the end of 2011. The average price of nickel was slightly higher in 2019 than in 2018 at $13,903 per tonne in 2019 compared to $13,114 per tonne in 2018, an appreciation of 6.0%, with a peak not seen in 5 years at $18,153 per tonne.
The rise in the price of nickel was not enough for New Caledonia’s producers to achieve financial stability. After years of losses, some operators have had to initiate processes to change their business models and to implement cost control plans.
The South plant which Vale is putting on sale is redesigning its industrial facilities in order to meet the needs of the electric battery market, by increasing its production of Nickel Hydroxide Cake (NHC) and by stopping production at its refinery. Koniambo Nickel SAS (KNS) failed to reach its full production capacity in 2019 and the Société Le Nickel (SLN) continues its transformation, expanding its ore export business and adjusting its work organisation in order to gain efficiency.
In addition, the major nickel operators have faced technical and social difficulties on certain sites which lead to a decline in activity, both in the mining and metallurgical sectors (respectively -8.1% and -17.7% compared to 2018) for the first time in 10 years. This drop in production impacted the level of metal exports (-19.6% in volume and -11.1% in value).
On the other hand, the exports of ore continued to grow (+ 7.7% in volume and + 16.3% in value) due to new administrative authorizations, notably allowing the sale of ore not valued locally.
At the same time, cobalt production continued to decline (-25.3% year-on-year). Coupled with the deterioration of the world price (divided by almost 2 taking an annual average), this decline also induces a fall in exports (-34.6% in volume and divided by 3 in value).
Source: IEOM
Opportunities in the Nickel Industry:
It is important to note that there are opportunities regarding the future of the nickel industry in New Caledonia, Matthew Chamberlain, Director General of LME stated "The London Metal Exchange (LME) needs nickel produced in New Caledonia" as the demand for electric batteries will increase, nickel being a critical component of those batteries. He adds “in 2022, all industrial metals and raw materials will have a known origin, traceability, natural resources can no longer come from dubious origins. Responsible nickel in countries respectful of human rights and the environment will be favored by manufacturers and consumers, traders will have to accept it”. He concludes, “The London Metal Exchange will need a lot of clean nickel for the next generation of electric vehicles, not to mention the demand for stainless steel. The challenge for New Caledonia will be to meet the growing demand of the global metals market”.
Source: www.la1ere.francetvinfo.fr/nickel-nouvelle-caledonie.html
MAJOR ACTORS
Direction de l'Industrie, des Mines et de l'Energie (DIMENC)
Government Owned
DIMENC contributes to the sustainable industrial development of New Caledonia, through its forward-looking actions in energy and mining matters, as well as control and regulatory supervision of industrial activities likely to harm the environment.
Mining cadastre: https://dimenc.gouv.nc/mines-et-carrieres/les-mines
Mai Kouaoua Mines (MKM)
Mai Kouaoua Mines is one of the smaller mining operators on the island, they are in a partnership with Chinese group JinPei and as such export their nickel to China.
Société des Mines de la Tontouta (SMT)
Since 1875, the mining sector of Etablissements Ballande, today Société des Mines de la Tontouta and its subsidiaries, have been able to develop the mineral resources of New Caledonia.
A historic mining player, the Ballande group continues to manage the mineral resource over the long term by guaranteeing maximum development of deposits.
La Société Le Nickel (SLN)
La Société Le Nickel was founded in 1880, it became a wholly-owned subsidiary of a new parent company called Eramet-SLN in 1985, now the Eramet group.
It is the biggest producer of ferronickel on the island and the most famous company on the territory employing around 2000 people.
Société Minière Georges Montagnat (SMGM)
Société Minière Georges Montagnat is a mining operator in NC, they produce 1.4 million tonnes of Nickel per year which they export to Japan, China and South Korea.
www.lefigaro.fr/conjoncture/2018/09/16-nouvelle-caledonie.php
Société Minière du Sud Pacifique (SMSP)
Company structure
SMSP was established in 1969, with its headquarters located in Ouaco, the Northern Province and its administrative headquarters in Nouméa, the Southern Province. Its main shareholders are the Northern Province (87%) and the Loyalty Islands Province (5%).
SMSP owns 51% of two world class metallurgical plants, the Northern plant, its flagship project, operated by its subsidiary Konimabo Nickel (KNS), in the Northern Province of New Caledonia, and the plant in South Korea, operated by its subsidiary Société du Nickel de Nouvelle-Calédonie et Corée (SNNC).
SMSP’s main mission is to enable the economic rebalancing of the country by contributing to economic development in the Northern Province.
Vale New Caledonia (VNC)
Vale New Caledonia was established in 2005, it is an ore mining company (limonite and saprolite) and production of nickel and cobalt. Located in the South of New Caledonia it employs 1350 workers. The 80% shareholder is the Brazilian group Vale, also the technological partner. VNC is currently looking for a buyer for its Southern plant.
RECENT NEWS ABOUT VALE NC
VNC’s nickel production showed significant growth in the first quarter of 2020 although the company has cut its forecast for global nickel production in 2020 in anticipation of its exit from New Caledonia.
The world number 2 nevertheless seems to pursue its objective which is to disengage from New Caledonia in order to focus its nickel growth in Indonesia.
VNC nickel production was + 66.7% compared to the last quarter 2019 and + 27% compared to the first quarter of 2019. It is important to note that these figures were obtained before the protective measures taken against the coronavirus and the reduction in nickel production in New Caledonia.
In December 2019, Vale nevertheless announced to investors that it will invest half a billion dollars in VNC until 2022 and that it will increase its nickel production to 50,000 tonnes per year. It depreciated the value of VNC by $ 1.6 billion in order to find a potential buyer but the coronavirus epidemic is delaying the cessation of VNC.
Source: www.la1ere.francetvinfo.fr/nouvellecaledonie/nickel.html