In New Caledonia, there's hardly a problem that doesn't stem directly or indirectly from nickel, or that doesn't lead back to it. Grande Terre, the archipelago's main island, is now under a state of emergency, declared after several nights of violence. It holds between 20% and 30% of the world's reserves, and produces 8% of processed nickel. But the nickel industry, discovered in 1864 in the Melanesian archipelago and highly volatile on the London Metal Exchange, has been in crisis for over 10 years, with serious social repercussions.
"Nickel flows from the chain and the mountains, it also flows in the veins of New Caledonians and makes their hearts beat. It's part of their lives, their history and their destiny," summed up Joël Viratelle, when he was director of the Maison de la Nouvelle-Calédonie in Paris. "Green gold" has always been an essential part of New Caledonia's economic health. But also "the key to the 'rebalancing' and wealth-sharing resulting from the Matignon Accords [1988] and then Nouméa Accords [1998]," he added. So many dashed hopes, which explain demonstrations and the current blocking of sites.
The sector accounts for a quarter of direct and indirect employment. The ore is also crucial further downstream in the industrial chain, as it is used to make stainless steel and automotive batteries. But its price plummeted by 45% in 2023, and continues to decrease, even though the International Energy Agency predicts a tripling of demand over the next 20 years. In its second annual report on metals, published on Friday, May 17, it even warned that "today's low-price environment creates risks for future nickel supply."
Plants shut down
The New Caledonian nickel landscape has been devastated. Production fell by 32% in the first quarter. French group Eramet recorded a 50% drop in sales due to the ongoing difficulties of its subsidiary Société Le Nickel (SNL), the leading local employer. "Despite a good operating performance, [it] continues to be structurally loss-making due to energy prices, access to resources and labor costs," explained Eramet's CEO in February. At the beginning of March, Christel Bories finally reached an agreement with the government to clean up her company's balance sheet: The state's loans to SLN (€320 million) and the intra-group debt (€325 million) will be converted into a "quasi-equity" instrument.
In just a few years, all the major players in New Caledonian nickel mining and trading – Vale, Glencore and Trafigur – have thrown in the towel. In the north, the Koniambo Nickel SAS ferronickel plant, launched in 2013, has been at a standstill since Switzerland's Glencore announced its departure, with 1,750 employees threatened with redundancy if no buyer is found before August. In the south, Prony Resources, which started operations in 2005, will have to find a replacement for Swiss trader Trafigura by March 2025 for its Goro deposit and plant (1,200 employees), again saved from closure by state aid. But the investor will be able to hold up to 74%, unlike the more "nationalistic" arrangement of 2021.
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