Feb 12 (Reuters) - Glencore Plc said on Monday it will sell its stake in Koniambo Nickel SAS (KNS) in New Caledonia and that production at KNS's processing plant will be put on hold for six months while a new investor is sought for the loss-making business.
France has been negotiating measures to save New Caledonia's struggling nickel industry and Paris said last week it had offered KNS state support worth around 200 million euros.
"Even with the French government’s proposed assistance, high operating costs and current very weak nickel market conditions means KNS remains an unprofitable operation," Glencore said in a statement.
"Glencore will shortly initiate a process to identify a potential new industrial partner for KNS," it said.
France's finance ministry declined to immediately comment.
Commodities miner and trader Glencore said last year it would only finance KNS, in which it has a 49% stake, until the end of February after pouring billions into the operation in the past decade.
Glencore added in Monday's statement that it would fund KNS during the six month period in which the company's plant will be placed in "care and maintenance".
The plant's furnaces will remain hot to maintain the viability of the site and all local KNS employees will be retained, it said.
KNS is a joint venture between Glencore and Société Minière du Sud Pacifique SA (SMSP), the latter controlled by New Caledonia's northern province.
New Caledonia has some of the world's largest nickel reserves but high costs and political tensions in the French-controlled Pacific territory have left its three processing plants on the verge of collapse.
The other two nickel processors are SLN, in which French miner Eramet has a majority stake, and Prony Resources, in which commodity merchant Trafigura has a minority stake. (Reporting by Gus Trompiz in Paris and Eva Mathews in Bengaluru; Editing by Savio D'Souza, Kirsten Donovan)