EXCLUSIVE: Fresh blockade halts operations at SLN’s Thio nickel mine

Société le Nickel will halt operations at its Thio nickel mine in New Caledonia to protect the site and its employees while fresh industrial action continues to jeopardise already-embattled operations, the company said on Thursday March 5.

Following a series of blockades over the past month and a half, I can confirm that all activities at Thio mine will be suspended to protect both our employees and the site, a spokesperson for Eramet confirmed when approached by Fastmarkets.

The decision was made as a seaborne ore carrier at the mine, destined for processing at SLN’s own Doniambo plant in New Caledonia, was left unable to export material amid fresh protests at the site on March 4.

The subsidiary of French multi-metal miner Eramet has been subject to ongoing disruptions at the site since January 17, 2020, when employees expressed dissatisfaction with working hours resulting from the company’s new safeguarding measures.

The company announced force majeure on January 21 at the Thio mine, located on the East Coast, 120 km from the capital of Noumeau, due to its work force continuing to disrupt operations.

Eramet imposed safeguarding measures at the end of the first half of 2019 following a turbulent period of mining strikes in the region, which led SLN’s nickel production to decrease by 3.4% compared with the first half of 2018.

SLN’s Doniambo site, where the ore was due to be shipped, also experienced similar blockades in the first half of 2019.

Though Doniambo struggled to fully recover production over the rest of 2019, leading to an 18% reduction in nickel production to 11,000 tonnes in the third quarter of 2019, it remains operative.

The share price of Eramet on the bourse, the French stock exchange, shed 29 points or 4.32% as a result of the action.

Despite production difficulties amid strikes, Eramet’s New Caledonia’s nickel ore production increased by 15% year on year over 2019 to an unprecedented 4.7 million wet metric tonnes (wmt).

Conversely, supply disruptions to furnaces at Doniambo led to a reduction of 13% or 47,000 tonnes of ferro-nickel over the same period.

The company had hoped to maintain an export rate of 4 million wmt of nickel ore up to 2021 but the closure of the Thio site is expected to have an impact thereon, though this is yet to be confirmed by parent company Eramet.

Fastmarkets assessed the ferro-nickel premium/discount, 26-32% Ni contained, cif China at a discount of $1,800-$2,000 per tonne on February 24 – a level held since January 27 and an historical low amid abundant Indonesian nickel pig iron supply and muted buying interest from stainless steel mills, which is expected to continue into the second quarter of 2020.