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(Sharecast News) - Mining and commodities giant Glencore has announced that it is calling time on its Koniambo Nickel SAS (KNS) mine in New Caledonia after having invested more than $4bn into the project over the past decade without seeing a return.
The mine, which is a joint venture between Société Minière du Sud Pacifique and Glencore, who own 51% and 49% stakes respectively, is now being transitioned into so-called "care and maintenance".
Glencore said it will continue to fund the operation according to an agreed budget, and the furnaces will remain hot for six months, as it starts a process to identify a potential new industrial partner.
"This decision follows several months of extensive discussions and negotiations with relevant government and other key stakeholders. Even with the French government's proposed assistance, high operating costs and current very weak nickel market conditions means KNS remains an unprofitable operation," Glencore said in a statement.
Glencore has held the KNS asset since its acquisition of Xstrata back in 2013, being the primary funder "without ever realising a profit", while the mine has contributed $5.6bn in economic benefits to New Caledonia (since 2012).
The FTSE 100-listed company said it is appreciative of the French government's efforts to revitalise and rescue the nickel industry in New Caledonia, but added that, "even with the proposed assistance, KNS remains an unsustainable operation and Glencore cannot justify continuing to fund losses to the detriment of its shareholders."
Glencore, which was trading more or less flat after markets opened on Monday, rose 1.3% on the news by mid-morning at 390p by 1125 GMT.
