(Updates to add reactions from China)
Singapore 06/04/2016 - New Caledonia has approved the export of low-grade nickel ore to China, the New Caledonian government said in a statement on Wednesday.
Société Le Nickel (SLN) has been approved to sell 350,000 wet tonnes of ore to China's Tsingshan Group over the next 12 months while Société des Mines de la Tontouta (SMT) has been approved to sell 350,000 wet tonnes to Chinese companies via Glencore over 18 months, it said.
The approval is under the condition that the two companies do not compete with Caledonian ferro-nickel producers.
The move follows production stoppage at a key customer - Australia's Queensland Nickel refinery - which imports an estimated three million tonnes per year of New Caledonian nickel ore. The refinery is expected to be shut till July.
New markets need to be considered so as not to jeopardise mining jobs affected by the end of exports to Australia, the statement said.
Local miners and contractors have called on the New Caledonian government as early as August last year to allow the export of ore to China following a decline in exports to Australia, Japan and South Korea.
In October, the government had authorised MKM Group to export 300,000 tonnes of low-grade nickel ore to China over the a period of 18 months.
New Caledonia has long refrained from selling ore directly to large consumers such as China to protect its domestic smelting and refining industry.
Chinese market participants said they do not expect much of an effect on nickel metal or nickel ore prices given that 700,000 tonnes accounts for a small proportion of China's total yearly nickel ore imports.
China imported 35.28 million tonnes of nickel ore and concentrates in 2015. Of that total, 34.28 million tonnes were from the Philippines.
Industry watchers believe the New Caledonian nickel ore is likely to be higher priced than Philippine nickel ore due to higher costs of production and freight to China, which would make it unattractive for Chinese buyers.
A Beijing-based nickel analyst noted soft demand for nickel ore in China due to a weak domestic stainless steel market.
"Whether there is demand for the ore is another question," he said.
China's total nickel ore imports dropped 26 percent last year.
But because the ore would be sold via Glencore, there is the possibility that the commodity giant may be able to sell at competitive prices and find buyers through its sales channels, a Shanghai-based nickel analyst added.
(Editing by Mark Shaw)