PARIS: Mining group Eramet, hit by a slump in the price of nickel, is delaying a project to develop huge nickel resources at Weda Bay in Indonesia, triggering a big asset writedown, it said yesterday.
But the French group, reporting a net loss of ¤370m ($507m) and a slump in nickel sales, said that this decision did not minimise the quality of the project.
Eramet is a leading company in the global nickel industry and in particular has big interests in New Caledonia.
Chief executive Patrick Buffet said in a results statement that the outcome for last year was “marked mainly by extremely low prices for nickel”. Buffet had warned in the middle of last year that the group’s performance in the second half of the year would be worse than in the first half.
Given the price and outlook for nickel, Buffet said that the group was delaying its final decision on investing in the nickel resources at Weda Bay. Eramet holds two thirds of this asset, with its partner, Japanese firm Mitsubishi Corporation holding the remaining third.
“Eramet and its partners considered that the conditions were not right to envisage a final investment decision concerning the Weda Bay project in 2014,” Buffet said.
He also said that further negotiations were needed with the Indonesian government to ensure an “appropriate” legal and tax framework.
The company said that the delay “in no way puts in question the quality of the project, involving one of the biggest world-class nickel resources, nor the performance of the process of hydrometallurgy developed successfully by Eramet teams for this type of resource.”
Hydrometallurgy is a chemical technique of extracting metal from ore.
Eramet and Mitsubishi Corporation linked in 2009 via a holding company to study the development of nickel and cobalt reserves at Weda Bay, a site bought by Eramet in 2006.
The two groups envisaged at the time investing about $3bn in the Indonesia resource and initially set 2012 as the deadline for a final decision.
Eramet said that it would take further cost-cutting measures this year. It would reduce investment to less than ¤400m, or 40 percent less than the average figure for 2012 and 2013.
It said it was also counting on the relaunch at the beginning of the year of two important projects: a complex for extracting metals from ores at Moanda in Gabon, and the production of ilmenite and zircon in Senegal.
AFP
