The Swiss trader Trafigura wants to buy the nickel plant from Vale, located in Southern New Caledonia. To oppose the project, the customary people have blocked the roads and access to the factory today. Doubts accumulate about the weaknesses of Trafigura’s dossier. Here are a few examples.
– Trafigura is not a metallurgist company. It’s a salesman whose job is to speculate, mainly on oil. This worries the opponents of the Trafigura project because the Vale plant in New Caledonia is very complex and requires real specialists.
– The project does not foresee a complete transformation of the ore. It will be a semi-finished product (70-75% NHC). Refining, i.e. further processing, which is the most profitable, will be carried out abroad.
– In order to offset its US$ 120 million annual losses (2020 estimate) and reach break-even, the Trafigura project must export raw ore. It would then need to export around three million tons of ore per year. This represents 75 ore carriers per year. This is a waste as the sale of the ore alone would only yield a quarter of the value of the LME. The processed ore brings in much more.
– To encourage employees to accept this project, Vale has promised them that the company will make a profit. It’s hard to see how it could do that. It has lost between $198 and $248 million a year for the past ten years. This year, it is expected to lose about US$130 million.
– Trafigura is putting very little money into the business. The proposed takeover amounts to just over US$1 billion. In reality, Vale is putting in 40% (without having shares), the state is also putting in 40% in the form of a loan (so it has no shares). The banks contribute 15 per cent. So Trafigura only puts in 5%.
– No one takes on the industrial risks because there is no industrialist.
– Trafigura has not given a guarantee on the solidity of the basin where the waste is stored. A rupture of the basin would be a very serious catastrophe that could cost several billions. Last year, in Brazil, a dam at a Vale plant (the same owner as the Caledonian plant) caused the death of three hundred people.
Photo > Vale plant in New Caledonia.