The management of the Koniambo Nickel SAS (KNS) nickel plant in New Caledonia announced on Friday, July 26th that they will be laying off their 1,200 employees at the end of August due to a lack of a finalized offer from a buyer. The company has been facing significant financial difficulties with a debt of 13.5 billion euros, and has been searching for a new owner since its main shareholder, Glencore, left in February. Despite ongoing interest from three potential buyers, KNS has not received a finalized offer or clear visibility on the financing of operations, leading to the decision to proceed with mass layoffs on economic grounds.
The layoffs of the 1,200 employees will take effect on August 31st, with only about fifty employees remaining on site to maintain the facility in a state of cold standby. KNS, a major employer in this French territory in the South Pacific, also had subcontractors employing around 500 people. Glencore had agreed to fund salaries until the end of August to facilitate a warm shutdown of operations, allowing for a quick restart in case of a sale. The company’s debt had been entirely covered by Glencore per their shareholder agreement with the Société minière du Pacifique Sud (SMSP), which is owned by public interests representing the independentist community of the North Province.
New Caledonia is deeply affected by the global nickel crisis, with the other two nickel plants on the island also facing closure. Prony Resources, located in the south of the archipelago, has completely halted operations, while the Société Le Nickel (SLN) in Nouméa reported a net loss of 72 million euros in the first half of the year, according to figures released by its main shareholder, the French group Eramet. These challenges are exacerbated by the ongoing insecurity in the archipelago since mid-May, disrupting ore supply and access for employees to various sites. Riots triggered by the vote on electoral reform, opposed by the independentists, have resulted in ten fatalities including two gendarmes, and extensive damage to the infrastructure estimated at over 2 billion euros.
The economic turmoil and uncertainty in New Caledonia have led to concerns about both salaries and employment in the region. The ongoing crisis has had a significant impact on the local economy, with businesses struggling to stay afloat and employees facing layoffs and financial instability. The events in New Caledonia highlight the interconnected nature of global markets and the vulnerability of economies to external factors such as commodity prices and political turmoil. Efforts are being made to find solutions to stabilize the situation and provide support to those affected by the closures and job losses in the nickel industry.
In the midst of these challenges, there are ongoing efforts to find a potential buyer for KNS and secure the future of the nickel plant and its employees. The government of New Caledonia, along with relevant stakeholders, is working to address the underlying issues contributing to the current crisis and exploring options to revitalize the nickel industry in the region. It remains to be seen how the situation will evolve in the coming months and what measures will be taken to support the employees and communities affected by the closures and economic downturn. The fate of the nickel industry in New Caledonia and its impact on the local economy will continue to be a topic of concern and discussion in the months ahead.
