Nickel, an essential mineral at the heart of the crisis in New Caledonia –

New Caledonia has one of the world’s largest nickel reserves and has made it a pillar of its economy. The fall in the world price of this mineral has given rise to the crisis that the archipelago is currently going through, while the exploitation of this resource is at the heart of its decolonization process.

New Caledonia contains between 20% and 30% of the world’s nickel reserves and produces 8% of the world’s processed nickel. This ore, polluting to extract, but widely used in the making of batteries for electric cars, is prized by countries aiming for an energy transition.

Nickel is central to the economy of the archipelago. The sector represents 90% of its exports and a quarter of its direct and indirect jobs. The drop in the world price of nickel last year hit New Caledonia hard. The ore lost half of its value between January 2013 and February 2024, going from 30,000 to 15,000 dollars per tonne.

Glencore throws in the towel

This decline can be explained by overproduction in Indonesia, which is driving prices down by flooding the world market with nickel. Thibault Michel, researcher at the French Institute of International Relations (IFRI), explains in The world that this is a deliberate strategy by Jakarta to suppress competition in order to obtain a monopoly on the production of this mineral.

The first concrete effects are already being felt. In February, Glencore announced that it wanted to divest from the Koniambo mine, one of the three main mines in New Caledonia. The Swiss trading giant explained that it had not made any profit since 2023, despite the four billion dollars invested. Due to the lack of a buyer, the factory decided to put it on hold on March 1st.

The Koniambo mine, one of the three main ones in New Caledonia, from which Glencore has divested. [AFP – DELPHINE MAYEUR]

Economic and social crisis

This announcement is only an illustration of the economic and social crisis which was already shaking New Caledonia before the current revolts. The conflagration followed the announcement of a constitutional reform weakening the demographic weight of indigenous people in local elections. But ultimately that was just the spark that ignited the powder.

>> Understand what is currently happening in New Caledonia: “Insurgent situation”, “state of civil war”; but why is New Caledonia burning? And Emmanuel Macron promises not to “forcibly” pass the electoral law in New Caledonia

“We have feared for several weeks a shift in the situation. Because in addition to the political crisis which has opened since the third self-determination referendum of 2021, in recent weeks there has been a very strong economic crisis with the crisis in the nickel sector” , analyzed in Forum Sarah Mohamed Gaillard, historian specializing in political and institutional issues in New Caledonia and Oceania.

>> The interview with Sarah Mohamed Gaillard in Forum:

The question of French colonization at the center of the Kanak riots in New Caledonia (video) / Forum / 5 min. / May 17, 2024

The crisis in the nickel sector risks undermining the New Caledonian social protection system, which already suffers from a structural deficit of around 85 million euros per year, reports The world. A budget of 8.4 million euros was released to finance partial unemployment for the thousand workers at the Koniambo mine. The French State is then called to the rescue to ensure funding for the sector.

A resource dear to independentists

Nickel is a mineral that occupies an important place for the separatists. The Nouméa Accords of 1998, intended to increase New Caledonia’s autonomy, transferred responsibility for nickel exploitation from Paris to the local government. Strengthened by this new control, the separatists have undertaken a “nickel doctrine”, which provides for the cessation of exports of raw ore in order to transform it directly in New Caledonia, bringing it greater added value.

This local takeover of the sector, however, comes up against the pitfalls of global markets. Added to the fierce competition imposed by Indonesia is the explosion in energy prices. As the nickel industry is particularly energy-intensive, its production is becoming less and less profitable.

>> Read also: Emmanuel Macron arrived in New Caledonia to try to ease the crisis

In this context, Emmanuel Macron is ready to provide significant financial aid, provided that the sector agrees to reform its “nickel doctrine” in order to be more competitive. This means the disappearance of the financial windfall and skilled jobs linked to ore processing.

Called the “nickel pact”, this commitment from Paris in return for these reforms is described as a “colonial pact” by the separatists. It was negotiated just weeks before the riots began.

Antoine Schaub



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