nickel, a highly flammable metal at the heart of the crisis

nickel, a highly flammable metal at the heart of the crisis
nickel, a highly flammable metal at the heart of the crisis

Mining operations stopped, clashes between rioters and police at the gates of the Doniambo factory, near Nouméa, a fire on the conveyor of the Kouaoua deposit, which transports the ore from this extraction center to ‘at the loading dock, 11 kilometers away: the nickel industry continues to pay its price for the unrest that has shaken New Caledonia since last month.

On May 30, Christel Bories, the boss of the Eramet mining group – owner of Société Le Nickel, which operates Doniambo – expressed her concerns about the supply of the metallurgical factory, whose furnaces must be permanently supplied. For its part, Prony Resources, which manages the Goro plant, launched an emergency plan on June 7 to ensure the safety…

Mining operations stopped, clashes between rioters and police at the gates of the Doniambo factory, near Nouméa, a fire on the conveyor of the Kouaoua deposit, which transports the ore from this extraction center to ‘at the loading dock, 11 kilometers away: the nickel industry continues to pay its price for the unrest that has shaken New Caledonia since last month.

On May 30, Christel Bories, the boss of the Eramet mining group – owner of Société Le Nickel, which operates Doniambo – expressed her concerns about the supply of the metallurgical factory, whose furnaces must be permanently supplied. For its part, Prony Resources, which manages the Goro plant, launched an emergency plan on June 7 to ensure the safety of the site and its staff while activity there is reduced to zero.

This is not the first time that nickel has been linked to the economic and social precipice on which the “Caillou” is slipping. In December 2020, the sale of the Goro industrial complex to Prony Resources, signed by the Brazilian multinational Vale, caused an outbreak of violence among the Kanaks. The police had to use their weapons.

Economic lung and political weapon

“The economic lung of the territory”, as it is usually called, represents more than 20% of jobs (direct and indirect), from mining to metal production in the three factories of Grande Terre: Prony Resources in Goro, in the South, La SLN with Doniambo in Nouméa and Koniambo Nickel SAS in Voh, in the North.

Following the Matignon agreements (1988) and the Nouméa agreement (1998), nickel took on a political dimension. A lever for “rebalancing”, the transfer of wealth from the community of European origin to the Kanaks, it is for them an essential asset in the perspective of possible independence. They are the architects of the “nickel doctrine”, which consists of limiting or even prohibiting exports of raw ore, in order to process it on site.

The nickel doctrine aims to preserve added value in the territory

“It’s an idea that can be defended, it aims to retain as much added value as possible in the territory. This is also the model that is defended in mainland France when we talk about mining revival! When, on the other hand, a country exports all its ore, it makes a very low margin and fails to diversify its economy. This is what we call the curse of natural resources,” explains Sébastien Chailleux, lecturer at Sciences Po Bordeaux and specialist in the mining industry and socio-environmental conflicts.

Crushed by the Indonesian competitor

However, the Caledonian “nickel doctrine” is shattered by the state of the market. In just a few years, Indonesia has become the world champion in mineral extraction, refining and processing. The sector is boosted by Chinese capital. A sign of this economic aggressiveness, “Indonesia has increased its declared reserves tenfold since 2017. It holds almost half of the official world reserves. And the increase in its production caused prices to fall in 2023,” notes Bordeaux engineer Laurent Castaignède, author of “The rush toward the electric car, between miracle and disaster” (Écosociété, 2023) and transport expert.

The emergence of the Chinese-Indonesian tandem is no coincidence. Nickel is an essential element of energy and ecological transition technologies, on which China displays its power. Historically used for alloys and stainless steel, high-quality nickel is a basic material for electric vehicle batteries. “There are two main types of batteries. The NMC battery, which contains lithium, nickel, manganese and cobalt. And the LFP battery which does not contain nickel. In the future, both standards will likely continue to exist. And the demand for nickel should be multiplied by three between 2020 and 2040,” explains Laurent Castaignède.

However, the promises are not enough. The handicaps of the New Caledonian sector are serious, as highlighted in a report submitted to the government in July 2023. If the upstream, the mining aspect, is viable, “the metallurgical activity is not profitable in New Caledonia over the period of the last twelve years. It depended on flows of public and private capital to ensure the continuation of operations,” judge the editors.

The metallurgical activity is not profitable

Unrelated to recent events, the Anglo-Swiss group Glencore, which owns 49% of Koniambo, has put the Voh factory on hold while waiting for a buyer. The future of the Prony Resources factory is up in the air for one year. And SLN has never been so close to stopping payments.

A “nickel pact” at a standstill

More than the cost of labor, higher than that of Indonesia, it is the staggering cost of energy which weighs down the accounts of this electricity-gluttonous industry. Energy is much more expensive in Nouméa than in Jakarta, where the prices of coal – which produces electricity – are regulated. “For a decade, Indonesia has also deployed a whole strategy of social and environmental dumping which makes New Caledonian nickel uncompetitive. This is what China did with other metals at the beginning of the century: once you have killed your competitors, you can raise your prices,” observes Sébastien Chailleux.

According to him, there is no other choice than to agree to produce at a loss with the financial support of public authorities if we want to keep local industry afloat to secure the supply of gigafactories. of batteries emerging from the ground in France and Europe. And avoid economic catastrophe and social explosion in the Pacific territory, at the end of our tether. The State is ready to grant new aid as part of a “nickel pact” which would keep the sector alive. It would notably involve the lifting of bans on the export of raw ore. For the moment, the separatists are balking. We are there. And the clock is ticking.

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