New Caledonia challenges France. Huge money in the background

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• New Caledonia has the third nickel reserves in the world. It also has iron ore, magnesium, cobalt and chromium
• For the independence movement, control over these resources is crucial if the island is to achieve full sovereignty, reports French daily Le Monde

There is almost no issue in New Caledonia that is not directly or indirectly related to nickel. Because although the phenomenal archipelago at the end of the world is associated with the sun, blue sky, tropical vegetation and the singing of exotic birds, it is thanks to nickel that it can enter the global economy.

There are economic and social riots on site, but it is mainly about the political fight between indigenous people and activists for independence and the authorities in Paris. WITH France Hundreds of soldiers were sent to the scene to calm the situation.

• New Caledonia is the only part of the Melanesian arc in the South Pacific that is not economically and politically dominated by Beijing. During three failed independence referenda – most recently in December 2021 – French loyalists argued that independence for New Caledonia would mean dependence on Chin

On Grande Terre, the main island of the archipelago, by decision of the president Emmanuel Macron a state of emergency was introduced. The reason was several days of riots. Six people have died since the riots began.

– Nickel not only flows from the mountains, but also in the veins of the inhabitants of New Caledonia and makes their hearts beat faster. It's part of their life, history and destiny, he once said Joel Viratellein the years 2006-2022 director of the House of New Caledonia in Paris.

Green gold it has always been an essential part of the economy given to the French colony. It allowed for the redistribution of wealth among the inhabitants of the archipelago and was crucial for the “restoration of balance” on the islands after the agreements in Matignon (1988) and Noumea (1998) regarding the decolonization of the territory after the civil war that took place in the 1980s. In.

It is estimated that New Caledonia is home to 20 percent. up to 30 percent world reserves of nickel – a chemical element crucial for the production of batteries for electric cars. However, the nickel industry, discovered in 1864 in the Melanesian archipelago, is highly unstable on the London Metal Exchange (LME) and has been in crisis for over 10 years, with serious social repercussions. The confirmation is a new wave of violence.

Shattered hopes explain the wave of outrage and violence following last week's vote in France National Assembly. The reason for the riots is an attempt to change the electoral system in New Caledonia, which was supported by deputies of the lower house of the French parliament in the vote.

The constitutional amendment on this matter provides that French citizens living in the archipelago for at least 10 years will have the right to vote in local elections. The Kanaks believe that this will reduce the importance of the votes cast by the indigenous inhabitants of the territory and lead to their marginalization.

The mining sector accounts for a quarter of direct and indirect employment on the island. The ore is also crucial further down the industrial chain. It is also used to produce stainless steel.

But the nickel boom also has a negative impact on the environment. Grand Terre “owes” the significant degradation of its unique environment to the nickel mines and smelters.

The International Energy Agency (IEA) predicts that demand for nickel will triple in the next 20 years. However, market instability contributes to a decline in raw material production. It fell by 32%. in the first quarter of this year

French group Eramet recorded 50 percent decline in sales due to the continuing difficulties of its subsidiary Société Le Nickel (SNL), one of the largest employers in the archipelago.

– Despite good operating results, the company remains loss-making due to high energy prices, access to resources and labor costs – she said in February Christel Bories, CEO of Eramet. In early March, Bories finally reached an agreement with the government on financial assistance. Thanks to a loan from the state to SLN (EUR 320 million) and an increase in debt within the group (EUR 325 million), it managed to survive the crisis, at least for now.

In New Caledonia, many tycoons wanted to make a fortune in nickel, but they failed. In recent years, several companies have withdrawn from the archipelago, such as Brazilian mining giant Vale, Swiss company Glencore and Trafigura from Singapore.

In the north, the Koniambo Nickel SAS ferronickel plant has been idled since 2013 after Glencore withdrew, and 1,750 employees are at risk of being laid off if no new worker is found to continue mining by August.

In the south, the Prony Resources plant must find a successor to the Swiss company Trafigura for its Goro deposit and the local plant (1.2 thousand employees) by March 2025.

Where do these problems come from? Obstacles in adapting New Caledonian nickel to the realities of the global market are of an economic nature, such as excessive energy costs, which are an essential parameter in the energy-intensive industry. However, politics is also involved.

“For independence supporters, control over this raw material is an economic and social lever on the way to gaining full sovereignty,” he emphasizes. Patrick Roger in a book unpublished in Poland titled “The Tragedy of New Caledonia” (Nouvelle-Calédonie, la tragédie).

The Noumea Accords transferred responsibility for nickel to local authorities. The Kanak National and Socialist Liberation Front (FLNKS) developed a “nickel doctrine” providing for control over resources, suspension of raw ore exports and takeover of SLN.

This approach, used, among others, by oil-producing countries, aims to move the value chain up to sell a refined product that is more valuable than natural ore.

However, the strategy to end post-colonial exploitation by Paris ended in failure. It is the world's largest producer of nickel Indonesia – extracts 1.8 million tons, before Philippines from 400 thousand tone. It takes fourth place Russia. New Caledonia is third with 230,000. tone.

During a visit to the archipelago in July 2023. Emmanuel Macron warned that it was time for a change in the “nickel doctrine”. He added that in the absence of an increase in exports, there is little chance that the three plants in the archipelago will remain competitive.

– The cruel reality is that New Caledonia cannot be competitive today. Nickel from Indonesia or other countries is much cheaper, the president added. Aid from Paris included in the “Nickel Pact”, announced in November 2023 and perceived by independence activists as a “colonial pact”, is therefore dependent on the easing of the current policy.

The government in Paris hopes that French battery factories will be supplied with production from the archipelago, as well as the Sonic Bay factory, which Eramet plans to develop in Indonesia together with the German chemical giant BASF.

Is this the right strategy? Unnecessary. Didier Juliennea specialist in the geopolitics of metals, says there will be fewer and fewer car batteries based on nickel and cobalt, as evidenced by the Chinese electric car maker's choice of other metals BYD.

“In these circumstances, New Caledonia must focus on what it knows best, which is the stainless steel industry,” Julienne adds.

Article translated from “Le Monde”. Author: Jean-Michel Bezat

Translation: Mateusz Kucharczyk

The title, subheadings and abbreviations come from the editors