Eramet secures SLN operations with French govt agreement

Apr 15, 2024 | Blog, News, Pacific

French mining conglomerate Eramet has navigated a critical agreement with the French government to safeguard the operations of its subsidiary SLN (Societe le Nickel) in New Caledonia’s Northern Province, as outlined in a report by Gus Trompiz and Kanjyik Ghosh quoted in industry website

Photo credit: Eramet/SLN

This accord marks a pivotal moment for SLN, which has been embroiled in a dispute with local authorities over financial guarantees vital for its mining activities. SLN’s operations have been in jeopardy due to the provincial government’s rejection of a short extension for these guarantees, which are imperative for covering potential environmental restoration costs. Eramet’s provision of financial assurances since 2020 have been instrumental in sustaining SLN’s operations, underscoring its commitment to the subsidiary’s viability.

The agreement between Eramet and the French government allows for the extension of financial guarantees to SLN, effectively averting the risk of a shutdown at its troubled nickel subsidiary. This development comes amidst broader discussions aimed at salvaging the loss-making nickel industry in New Caledonia, with SLN playing a central role. The French government’s negotiations for a rescue package entail substantial loans and subsidies to revamp mining permits, exports, and energy infrastructure, positioning SLN as a key beneficiary of these efforts.

Meanwhile, Indonesia’s emergence as a dominant player in the global nickel market presents significant implications for the industry’s dynamics, as highlighted by Eramet’s CEO Christel Bories in a recent interview with the Financial Times. Bories foresees Indonesia potentially accounting for more than three-quarters of the world’s pure nickel production within five years, signalling a seismic shift in the market landscape. This transformation poses challenges for traditional players in the nickel sector, with Bories suggesting that uncompetitive mines elsewhere may face closure. Indeed, the market upheaval has already led to production cuts and mine closures by major mining companies like BHP and First Quantum in Western Australia, reflecting the growing influence of Indonesia’s low-cost nickel supply.

Eramet’s agreement with the French government underscores its commitment to sustaining SLN’s operations in New Caledonia amidst regulatory challenges. Simultaneously, the rise of Indonesia as a dominant nickel producer heralds a new era in the global market, with profound implications for industry players worldwide. As the nickel sector undergoes rapid transformation, stakeholders must adapt to the evolving landscape to secure their positions in this dynamic industry.