Nickel action not over yet in New Caledoniaadmin
Contrary to reports late last week, industrial action in New Caledonia is still impacting nickel supplies and SLN is reported as saying that its stockpile of ore supplies at its Doniambo smelter are diminishing to a critical level. The blockade of SLN mines by the local union, CSTNC, is obviously still affecting supplies and has not been eased.
SLN’s smelter has already been operating at its minimum capacity level and if the industrial action continues it may have to be shut down altogether ”“ a process that would cause much longer disruption to output than a mere switching off and switching back on again when supplies improve. A smelter shutdown is a long process and could shut off supplies for weeks or months.
What is particularly frustrating for SLN, which is majority owned by Eramet of France, is that all the strikers’ demands are totally outside its control. The main demands appear to be, according to a Radio New Zealand report this morning, the removal of Filipino workers from another nickel company (Inco’s Goro), the resignation of the government and lower living costs.
The strikers are being led by Sylvain Nea, a controversial union official who is already facing a three-month jail sentence over his role in illegal activities at a strike against SLN a year ago. Again, according to Radio New Zealand, talks between the union and government were abandoned at the weekend when Mr Nea, apparently inebriated, publicly insulted local and French politicians.
With the nickel market in a critical state with LME stocks at only 5,238 tonnes ”“ admittedly slightly better than a week ago ”“ any decision to shut down the Doniambo smelter would be likely to push nickel prices even higher, and would have severe financial consequences for SLN which is already reported as losing revenues of $1.5 million a day. The company has already declared force majeure on its nickel shipments to Asian customers, and would almost certainly have to do the same on its ferronickel shipments to Europe.
New Caledonia is the world’s fifth largest producer of mined nickel with about 8% of world supply last year.