After the SLN until 1968, who now wants to control the Greek nickel
Le Nickel is the world’s leading producer of ferronickel for stainless steel. In the 1950s, New Caledonian metallurgists built a plant in Greece. This nickel producer was a subsidiary of SLN. His name is LARCO and could become Russian.
Larco Nickel Metallurgical Plant in Larynna, Greece © Alain Jeannin
© ALAIN JEANNIN Larco Nickel Metallurgical Plant in Larynna, Greece
By Alain Jeannin
Posted on 23/05/2019 at 13:26, updated on 23/05/2019 at 15:23
Thirteen factories produce nickel alloys around the world. For stainless steel and potentially also for electric vehicles. Two of them are in New Caledonia. Another factory is located in Greece, north of Athens. Russian and Kazakh investors want to take control of LARCO by paying off their debts, which would also allow them to acquire significant stakes in PPC, the Greek state-owned electricity utility, a LARCO shareholder.
The deleveraging on forced marches that will lead LARCO, the Greek producer of nickel - 138 million euros to repay in the medium term to the European Union - plus 300 million euros of debts vis-à-vis PPC (Greece’s electricity) - paves the way for an underground battle for control of its nickel mines and ferronickel metallurgical plant in central Greece. The Larynna industrial complex, similar to the Doniambo factory, was designed with SLN engineers from New Caledonia in the 1950s. LARCO was a subsidiary of the SLN during the thirty glorious years. In the library of the factory, on old shelves worn by time, facing the sea and the olive groves, are French metallurgical books stamped “SLN Nouméa.”
LARCO, a nickel factory in Greece © Alain Jeannin
© Alain Jeannin LARCO, a nickel factory in Greece
A mining producer based in Kazakhstan (ENRC), a subsidiary of a Russian trading company (TELF AG) registered in Lugano, Switzerland, mines nickel in Guatemala is for potential buyers. Their goal would be to relaunch LARCO by taking over the management of its industrial and mining assets. Russian and Kazakh investors have agreed with the Greek metallurgical producer. They set up an office in Athens. The bargaining issue consists of lignite and nickel mines operated by PCC and LARCO. Nickel resources in Greece are estimated at 250 million tonnes. This did not prevent TELF from testing 10,000 tons of Guatemala ore with Greek ore, to check their compatibility in the furnaces of the Larynna plant. TELF and its Russian and Kazakh investors are still planning to file a LARCO takeover plan as part of the company’s privatization process. Investors from the cold have won the trust of Greek unions “by committing to maintain jobs and our meager wages for three years, by taking over the debts of the company,” says a union representative in La1ere.
Greek ferronickel from Larco, a process identical to that of the Caledonian SLN © Alain Jeannin
© Alain Jeannin Greek ferronickel from Larco, a process identical to that of the Caledonian SLN
LARCO’s profitability was not achieved, but it improved after the renegotiation of the price of electricity delivered to the plant which decreased by 24%. The negotiators of TELF, “a discreet Swiss company of Russian and Kazakh interests” according to the information site Energy Press in Athens, wanted to conclude the operation of recovery at the beginning of April. Alas, they still have to wait, despite the support of some influential members of the Greek government. First of all, it is necessary to settle the imbroglio of the governmental aids paid by Athens. They avoided the bankruptcy of LARCO but are challenged by Brussels.
Greek nickel ore in the LARCO plant © Alain Jeannin
© Alain Jeannin Greek nickel ore in the LARCO plant
A factory, mines, jobs
As we can see, the green light from the European Commission is not yet secured, but the creation of a new mining complex, involving Russian, Kazakh and Greek investors, is on the horizon. After the purchase of the port of Piraeus by China, Greece still facing drastic economies and mass unemployment wants above all to save its nickel plant. It alone provides work and makes a whole region live.
LARCO relaunched? The Greek nickel producer is today the main competitor of the New Caledonian SLN for the supply of alloys to the European steelmakers.
_ NICKEL: Fitch on Friday lowered their London three-month nickel average price forecast for 2019 to $13,250 a tonne, from $14,500 estimated earlier, on rising global economic risks, an escalating trade dispute and disappointing refined nickel demand from China so far this year._*
This sort of thing in Indonesia is not uncommon. I was working there in 1998 when the riots kicked off. The Chinese community and Chinese businesses in particular were a target for the rioter. I suspect this current round of riots will be relatively short lived but they will act as a timely reminded of how volatile Indonesia can be.
It looks like the riots in Indonesia might have impacted LME stock draw down. 978 tonnes left the exchange today leaving a total of 164,058 tonnes. We will know tomorrow if the reduction has been mostly live or cancelled warrants.
You get a fair idea of just how fragile the nickel supply chain is when a few riots in Jakarta result in the nickel spot price shooting up over 4%. Nickel in the LME currently trading at $5.6011, up 21.61¢/lb. on the day at the moment.
If things deteriorate further and the riots spread to other parts of the country this could get an awful lot worse.
It is an eternal problem of being dependent on a geographic zone, as you said.
We must not forget that it is in the ring of fire.
This is what happened in 1998.
“Benchmark nickel on the London Metal Exchange surged nearly $500 in about 10 minutes, spurred by Chinese investors covering short positions, traders said.”
All base metals are up today, mostly by a fraction of 1%. Nickel, however, is currently up by close to 5%. This is the Chinese rushing to cover short positions fearing rioting might spread to their nickel operations on Sulawesi. There’s tension there already so it wouldn’t take much to set things off.
If everything calms down I’d expect to see the nickel price settle back down to around $5.40/lb.
Chronicle of nickel: the price of the metal doped by the risks in Indonesia
Demand and purchases increased sharply on the stock exchanges in London and especially Shanghai. Nickel prices benefited from fears of a reduction in Indonesian exports.
Northern plant: Koniambo Nickel (KNS-SMSP-Glencore) in New Caledonia © Alain Jeannin
© ALAIN JEANNIN The Northern Plant: Koniambo Nickel (KNS-SMSP-Glencore) in New Caledonia
By Alain Jeannin
Posted on 25/05/2019 at 01:31, updated on 25/05/2019 at 02:02
Despite worries about global growth and the harsher tone adopted by the protagonists of trade talks between China and the United States, the price of nickel at three months rose by 2.5% during morning trading on Friday. May at the London Metals Exchange.
“More than 5,200 nickel batches were exchanged at 9:37 London time, representing approximately $ 317 million traded.”
Metal Newsletter Fastmarkets
It has been enough if London analysts speculate on the intensification of riots in Indonesia, which began after the announcement of the results of the presidential election, so that the price of nickel returns to the height. In the City of London, players in the industrial metals market fear a paralysis of Indonesian port exports. In response, “the price of a tonne of nickel has recovered nearly 500 dollars, in minutes, for contracts July,” says the latest note from Marex Spectron, the main industrial trader in London.
Other promising news, nickel stocks in the global warehouses of the London Metals Exchange (LME) fell to 101,000 tonnes, their historic low since 2012, “an unprecedented level” says Alastair Munro, an analyst at the LME.
On the news feed, Australian producer BHP said “it was worthwhile to invest and add new resources for the production of nickel sulphide for the electric vehicle market.” Nickel is finally benefiting from the recovery, at unprecedented price levels, of the iron prices that make up the ferronickel produced in New Caledonia by the SLN and the SMSP, as well as in South Korea for the latter.
On the LME, the ton of nickel for delivery in three months traded at 12.467 dollars Friday at 15H30 GMT or 5.65 dollars per pound. Up 4.86% for the day and 3.77% over the week.
This sort of thing must make living and working in Indonesia if you are Chinese a bit unnerving and probably goes a long way to explaining the large jump in the price of nickel on Friday. The price should start to dribble back down next week, assuming things calm down.