Eramet in talks with France to offload debt from SLN nickel unit

Credit: Eramet

Eramet is in “very advanced talks” with the French government to remove from its balance sheet several hundred million euros of debt related to its loss-making nickel subsidiary SLN in New Caledonia, the mining group said.

The company’s talks with the French authorities are part of wider negotiations to rescue the struggling nickel industry in New Caledonia.

Eramet, which has refused to inject more funds into SLN, aims to reach a deal in the coming weeks with France to remove 320 million euros ($345.82 million) of SLN’s debt from its own balance sheet, Chair and CEO Christel Bories told reporters on Wednesday, declining to give further details.

The debt included a new 60 million euro loan granted to SLN by the French government this month. The loan should enable SLN to continue operating at least until April, Bories said on a results call.

Beyond the debt discussions, Eramet remained open to different longer-term options for SLN, the CEO said.

A spokesperson for France’s finance ministry on Thursday said that SLN’s debt was among issues being discussed with Eramet and that talks were well advanced.

Eramet shares rose more than 4% by 1150 GMT, with analysts welcoming the prospect of its debt being reduced.

France has also offered loans to help to avert the collapse of New Caledonia’s two other nickel processing companies, Koniambo Nickel SAS (KNS) and Prony Resources.

KNS co-owner Glencore, however, this month halted output at the KNS processing plant while it seeks a buyer for its stake.

Eramet reported a sharp drop in annual earnings, reflecting weak metal prices. It recorded a 218 million euro asset impairment related to SLN.

SLN’s troubles have contrasted with profitable growth for Eramet’s nickel business in Indonesia, where it runs the Weda Bay mine with Chinese steel group Tsingshan.

Metal prices have remained weak so far this year in the face of low demand, notably in China, but a trend of production capacity being closed could support a recovery, Bories said.

In its shift towards battery minerals, Eramet would continue to look at potential investment in a project with German chemical group BASF to process ore from Weda Bay into nickel and cobalt feed for batteries, Bories said, declining to give a timeline.

($1 = 0.9253 euros)

(By Gus Trompiz; Editing by Benoit Van Overstraeten, Timothy Heritage and David Goodman)


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