After its nickel division suffered further losses in the first half of the year, French company ERAMET intends to make further cost cuts and will place more emphasis on the lower grade nickel pig iron market through its Indonesian mining project.

According to Reuters the company, which has major nickel operations in New Caledonia, reported an operating loss of 104 million euros for its nickel division compared to an 89 million euro loss 12 months earlier.

Nickel prices were higher than in the first half of 2016 but below the production costs of the company’s nickel unit in New Caledonia, while depreciation of inventories and ramp-up costs at the Sandouville refining plant in France also contributed to the division’s results.

ERAMET aims to cut its nickel production cost to US$4.50 per pound by the end of 2017 after reducing it from $6 to $5.06 in 2016. However, the plan was set back in the first half of the year due to two cyclones and the impact of local protests on New Caledonia, which saw costs increase to $5.17.

ERAMET CEO Christel Bories said, “We’re working flat out to reach $4.50 which is still our target for the end of the year. With a market price that languished below $4.50 in the first half and for some time before that, we’re convinced we have to go beyond $4.50 and pretty quickly.”

The company has also altered its nickel marketing strategy by expanding its offering to include nickel pig iron (NPI) in addition to the higher grade alloys currently produced.

It will produce NPI from 2020 at its Weda Bay project in Indonesia, which has been revived through a joint venture with Chinese steelmaker Tsingshan, a leading world stainless steel producer. The expected production will support a plan to increase ERAMET’s nickel output from 55,000 tonnes in 2016 to 88,000 tonnes in 2020.

“NPI production capacity is being developed because industry needs it. I think it’s better to be part of it than not, because in any case we would feel the consequences,” Christel Bories said.

Acquired by ERAMET in 2006, Weda Bay has measured, indicated and inferred resources of more than 9.3 million tonnes of nickel. In early June the company announced it had finalised an agreement with Tsingshan to develop the project on Halmahera Island.

The JV will see Tsingshan expand its industrial set up in Indonesia, refining nickel ore through pyrometallurgical processes. Each partner will market its share of the production. Nickel ferroalloys sales are expected to start in 2020, for annual nameplate capacity of 30,000 tonnes of nickel.

ERAMET Nickel extracts nickel ore from its mines in New Caledonia and transforms it locally into ferronickel at its Doniambo plant. The Sandouville plant in France transforms nickel matte into very high-purity nickel metal and salts.