how the nickel disaster worsens political tensions | EUROtoday

Published on : 05/29/2024 – 11:02Modified : 05/29/2024 – 11:06

4 minutes

How far-off appears the time when New Caledonia negotiated with Tesla. In 2021, the Prony Resources nickel processing plant, within the south of the island, signed a partnership with the American electrical automobile producer for the provision of 42,000 tonnes of nickel over a number of years.

Today the nickel trade, which represents 90% of the archipelago's exports, is at a standstill. In the north, the Koniambo Nickel (KNS) plant was shut down on March 1. The major shareholder, the Anglo-Swiss group Glencore, threw within the towel after accumulating losses. In Nouméa, Société Le Nickel (SLN), a subsidiary of the mining big Eramet, is near ceasing funds regardless of a state mortgage of 60 million euros final February. As for Prony, it’s in search of a purchaser and likewise acquired a state mortgage of 140 million euros in March.

New Caledonia, nevertheless, has 1 / 4 of the world's assets of this uncommon ore, which is crucial for making stainless alloys and electrical batteries. But the flagship Caillou trade has been confronted with the autumn within the value of nickel, which has misplaced 45% of its worth in 2023. At the beginning of final yr, a tonne of nickel was buying and selling at round $28,000 on the LME (London Metal Exchange) from round $16,000 in December. Still in 2023, the trade was additionally weakened by Indonesia's takeover bid for the sector, managing to dominate 50% of manufacturing. The three metallurgical factories in New Caledonia, closely in debt, at the moment are on the verge of chapter.

Energy prices too excessive

“The problem comes mainly from supply,” explains Emmanuel Hache, economist at IFP Énergies nouvelles and analysis director on the Institute of International and Strategic Relations (Iris). Indonesia has elevated its manufacturing from 10% of the market to 2017 to 50% in 2024. It has develop into the worth maker in the marketplace.

In query, the worth of vitality which is essentially unfavorable to the trade of the archipelago: “There is a ratio of one to five between Indonesia and New Caledonia, especially since in the Caledonian case, the factories refine directly on their territory, which costs a lot of energy and prevents the products from being competitive,” continues the economist.

Certainly, current tensions in the archipelago originate from the contested reform on the enlargement of the electorate. But in a territory where the nickel industry is the main employer, with 20 to 25% of New Caledonian employees, the economic crisis is an aggravating factor: “If one of many websites closes, that's instantly 1,700 jobs threatened, so we’re transferring from a political disaster to a severe social disaster, which was already latent,” explains Emmanuel Hache.

Read additionallyNew Caledonia continues its return to regular with the lifting of the state of emergency

At the doorway to Nouméa, the SLN pyrometallurgy manufacturing facility was even on the forefront of the clashes between rioters and the police which occurred a couple of hundred meters from the positioning, whereas all of the mines within the territory are on the cease.

A “nickel pact” consistently postponed

Faced with this fixed menace, the State has tried to intervene. For 4 months, Bercy has been negotiating with the president of native authorities, these of the provinces and producers, the adoption of a “nickel pact”, a form of safeguard plan meant to revive the sector. In return for a 200 million euro subsidy on the price of vitality, the factories would undertake to provide the European market with electrical batteries as a precedence. “We realized that this asset was fundamental for France and Europe in terms of critical materials,” feedback Emmanuel Hache. But discussions have been at a standstill since April and the textual content is already in its eighth model.

Read additionallyNew Caledonia in quest of diversification

For the separatists, who notably management the manufacturing facility within the north of the island, the commitments requested from New Caledonia (group funding, tax measures and reforms to the mining code) are thought-about too expensive. Major level of confrontation, the anticipated contribution from the archipelago, to the tune of 66.7 million euros. A value that was too excessive for the separatists, whereas the territory was in debt at 153% of its price range on the finish of 2023, in keeping with the native authorities.

Some of them additionally imagine that this pact would characterize a step backwards in comparison with the Nouméa settlement of 1998, which transferred accountability for nickel from Paris to New Caledonia. In response, the elected representatives of Congress refused to authorize the president of the Assembly of the Northern province, Louis Mapou, to signal the textual content and requested the creation of an advert hoc fee to work on the difficulties of the sector.

With AFP