Eramet Announces Debt Conversion Agreement for New Caledonia Nickel Unit
Eramet, a French multinational mining and metallurgy company, has reached an agreement to convert the government loans of its New Caledonia nickel unit, Société Le Nickel (SLN), into equity. As of the end of December, these loans constituted approximately 40% of Eramet's net debt, which stood at 614 million euros. Since then, the French government has provided an additional 60 million euros in loans to SLN, increasing the total government loans to the firm to 320 million euros.
The debt conversion arrangement will relieve SLN from the obligation of repaying these loans but will not affect the ownership structure of either SLN or Eramet. Eramet holds a 56% stake in SLN, while the French state owns a 27% stake in Eramet itself.
France’s Finance Ministry has confirmed the deal, stating it will strengthen Eramet’s balance sheet without requiring further financial assistance from the state. This agreement comes as part of ongoing efforts to rescue New Caledonia's nickel industry, which has been challenged by high operational costs, political unrest, and stiff competition from Indonesian nickel suppliers.
Eramet has committed to continuing operational support for SLN, contingent upon potential financial backing from both the French government and New Caledonian authorities. The deal is timely as SLN is facing an April 10 deadline to conclude a court conciliation process for its business overhaul.
Additionally, the French government has proposed loans to support the stability of New Caledonia’s other nickel processing entities, Koniambo Nickel SAS (KNS) and Prony Resources. However, last month, Glencore, a co-owner of KNS, halted production at the KNS processing plant while exploring options to divest its stake.
