Feb 12 Reuters Glencore said on Monday it will sell its stake in Koniambo Nickel SAS KNS in New Caledonia and that production at KNS39;s processing plant will be halted for six months while a new investor is sought for the lossmaking business.

France has been negotiating to save New Caledonia39;s nickel industry and Paris said last week it had offered KNS state support worth around 200 million euros.

Even with the French government39;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.

The French government took note of Glencore39;s decision and would maintain its offer of state aid for KNS, a finance ministry official told reporters.

The government39;s position remained that an industrial player and not the state should invest in KNS and New Caledonia39;s other nickel processors, the official said, adding that Paris was not excluding at this stage the possibility of a Chinese investor.

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.

Glencore added in Monday39;s statement that it would fund KNS during the sixmonth period in which the company39;s plant will be placed in care and maintenance.

The plant39;s furnaces will…