nickel, the economic lifeblood of the archipelago, is in free fall

While New Caledonia has been gripped by riots in recent days, a social crisis is brewing around the nickel issue.

Five people have been killed since the start of the violence in the archipelago against a backdrop of political crisis against the constitutional reform denounced by the separatists. This crisis is also accompanied by a social crisis around the question of nickel, the economic lifeblood of New Caledonia.

It is the main source of income for the archipelago and one of the main employers, but nickel extraction has been in free fall in recent months. In total, 13,000 jobs are linked to this activity – almost one in four jobs in New Caledonia – whether directly on mining sites, in research or with subcontractors. It is therefore no coincidence that in recent days we have seen mobilizations and blockades precisely at the entrance to these sites. The Nickel company, for example, only has one mine out of five left in operation.

The archipelago holds between 20 and 30% of the world’s nickel resources, exploited by three companies all in great difficulty even before the start of the crisis. Due to a lack of a buyer, the KNS factory in the North was put on hold in March. Another is looking for a partner and the Eramet group, the largest private employer in the archipelago and which manages the company Le Nickel, saw its sales fall by 50% in the first quarter.

However, since nickel is used to manufacture batteries for electric cars, there is a large market opening up for the sector. But New Caledonia is not the only one on the file. For four years, Indonesia, the world’s largest producer, has flooded the market with its nickel much faster than the increase in demand. Result: the price of a tonne fell by 45% in 2023, which had a direct impact on activity in New Caledonia, in addition to the surge in energy prices and with a 32% drop in production in the first quarter of this year.

The Minister of the Economy Bruno Le Maire proposed a “Nickel pact” in November which plans to help factories with energy costs. But the State does not want to pay alone and is asking New Caledonians to finance a third of the measure, or nearly 67 million euros. “Out of the question”, respond for the moment the separatists in the face of the already unsustainable debt for the archipelago which amounts to 153% of its budget. The pact is still under discussion.