Transcript
WZ: Eramet says despite the difficulties of late the overhaul of SLN is on track but it needs to be completed by securing lower electricity prices for the smelter in Noumea. The board acknowledges that new work rosters have been agreed to and that SLN is now allowed to export four million tonnes of nickel ore to get cash.
DW: How serious is the problem at SLN?
WZ: The figure being bandied around is that SLN has been losing about $US10 million a month. This is due to the sharp fall in the price of nickel at the end of the global mining boom which has dropped below the cost of producing the metal. A couple of years ago SLN was kept alive with advances from both Eramet and the French state totalling more than half a billion US dollars. That money is just about spent, and all signs are that there won't be a repeat of such a rescue mission.
DW: What would be the consequence?
WZ: In the lead-up to this week's Eramet board meeting, there was talk of invoking the bankruptcy protection available under French law, but it was decided to hold off. A closure of SLN has been mooted but neither France nor New Caledonia want that. New Caledonia's politicians say thousands of jobs are at risk and should SLN fold it would entail the collapse of New Caledonia's already troubled social security system.
DW: What steps have been taken to avert the worst-case scenario?
WZ: SLN could secure a new rostering arrangement which means employees will work longer but on fewer days which in turn will increase productivity. However, there have strikes over the changes which have hit production badly. The demand to lower power supply costs will undoubtedly increase pressure on New Caledonia's leaders. A new power plant is being planned for Noumea and the SLN smelter, and after considering coal it has been decided to opt for one using gas. An interesting aspect is that using coal would have turned New Caledonia into the world's per capita top polluter.
DW: What is the feeling about the future of the nickel sector?
WZ: For New Caledonia, nickel is a mixed blessing. It generates almost all its export revenue but that makes it very dependent on a single commodity. There has been gloom for years now, in part because of the drop in the price of nickel. Another huge plant, the one owned by Vale of Brazil, was to be mothballed. But perceptions and expectations have changed. Vale is reinvesting massively as electric cars are expected to trigger additional demand for nickel to produce batteries. Eramet of course shares such hopes for its SLN plant.
DW: How soon is there likely to be any decision about possibly invoking bankruptcy protection?
WZ: The head of the Eramet says negotiations are under way and she hopes that within weeks a way will be found to lower production costs.
