Pacific / New Caledonia

New Caledonia and Vale agree on debt settlement

13:09 pm on 12 April 2019

New Caledonian provincial governments and Brazil's Vale company have reached an agreement on settling a debt incurred over the construction of the Vale nickel plant in the south of the main island.

A photo taken on May 27, 2015 shows Brazilian Vale's nickel processing plant of Goro in southern New Caledonia. Photo: AFP PHOTO / FRED PAYET

After two years of negotiations, Vale has agreed to absorb $US250 million owed by the provinces which in 2005 had acquired a five-percent stake in the nickel project launched by Inco of Canada.

The stake in the nickel plant project was financed with a loan which New Caledonians expected to repay with the dividends from the plant.

However, a raft of problems multiplied the cost of the project from just under $US two billion to an estimated $US eight bilion and the New Caledonians could not meet their obligations.

Inco was taken over by Vale which completed the plant at Goro.

According to the president of the southern province Philippe Michel, Vale has agreed to wind back the debt to the 2005 level.

He said this means a debt of about $US 100 million remains which will be interest free and to be repaid with the dividends.