Is an important nickel supplier about to collapse?

15 February 2023 – Is a New Caledonian nickel supplier about to fail? Once again, the company had to be rescued from financial collapse by the state. In 2023, every second new car in the EU is supposed to be fully electric, but will battery production even be able to keep up due to a lack of raw materials? And is the Trafigura nickel scandal possibly even bigger than previously thought?

Is a major nickel supplier about to collapse?

New Caledonia is considered one of the important producing countries for nickel ores, ferronickel and other alloys. The operating company of an important nickel mine, Société Le Nickel (SLN), which is controlled by the French commodities group Eramet, has now had to be rescued from financial collapse once again with a loan of almost 43 million US dollars by the French state.

Already more than 600 million US dollars burnt

As early as November 2022, SLN had warned that it would need further loans and funding after the last tranche of a nearly US$600 million bailout package from 2016 was disbursed.

Prices for Ni at record levels

At a time when nickel prices are at record levels and stainless steel producers are already investing in phytomining due to scarce availability, it is puzzling in our eyes why SLN has been artificially kept alive for 11 years.

EU: 50% new car registrations in 2023 all-electric

In a recent newsletter, the European Automotive Suppliers Association, CLEPA, predicts that 50% of European car production will be fully electric in 2023. At the same time, however, CLEPA warns that battery supply remains difficult and that urgently needed investments have not yet been made.

Is China running away from everyone?

Just 3% of the necessary 131 billion euros that would have to be invested in the expansion of material and cell production by 2030 have been made so far. At the same time, China is already outpacing the EU and the United States in terms of investment. This could lead to further bottlenecks and high prices for raw materials such as nickel or lithium.

Damage from nickel fraud even higher than previously assumed?

Another 100 million US dollars could be added to the previously assumed damage of more than half a billion US dollars to the commodity trader Trafigura, which is said to have been the victim of systematic fraud in the nickel trade. According to media reports, some of the nickel deliveries, which turned out to be empty containers, have already been sold. If this is true, Trafigura’s customers are likely to file claims for compensation soon.

Commodity scandal much bigger than assumed?

According to media reports, the fraud was exposed after inspectors were sent to inspect the alleged shipments at the instigation of the financing CITI Bank. CITI and Trafigura apparently declined to comment on the matter at this time.

Meanwhile, questions have even arisen as to whether the Gupta Group, which is involved in the incident and is relevant and notorious in the commodities industry, might just be a pawn in a much bigger commodities trading scandal.

Nickel tangle points to tough fight for commodities

In view of the mixed situation in the mining, processing and international trade of nickel, the jealous guarding of raw materials through export bans and the investments of stainless steel giants in the mining of raw materials on a plant basis, there are indications that a worldwide run on the scarce raw material is developing.

Especially if one also questions why mining companies, who are supposedly sitting on large deposits of nickel ore, are not able to make a profit. Has the quality of the ore in New Caledonia already sunk so low?

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