The main issue in New Caledonia revolves around the nickel industry, as the archipelago’s main island, La Grande Terre, holds between 20% and 30% of the world’s nickel reserves and produces 8% of the processed nickel. The nickel industry has been in crisis for over a decade, with significant social repercussions. Nickel is essential to the economic health of New Caledonia and plays a key role in the region’s history and destiny. However, hopes for wealth distribution following the Matignon Accords (1988) and the Noumea Accords (1998) have been dashed, leading to protests and current blockades of sites.
The nickel sector in New Caledonia provides a quarter of direct and indirect jobs and is crucial for the industrial supply chain, as it is used in the production of stainless steel and automobile batteries. Despite a projected tripling of demand in the next twenty years by the International Energy Agency, nickel prices have fallen by 45% in 2023 and continue to decline. The agency warns of potential supply tensions due to the falling prices. Production in New Caledonia has decreased by 32% in the first quarter, with French company Eramet experiencing a 50% decrease in sales due to ongoing challenges at its subsidiary, Société Le Nickel (SLN), the largest local employer.
The nickel industry in New Caledonia is facing significant challenges, with factories shutting down and production declining. Despite operational efficiencies, SLN remains structurally unprofitable due to high energy costs, limited access to resources, and labor expenses. In February, Eramet CEO Christel Bories announced an agreement with the government to restructure SLN’s finances, converting state loans to SLN (320 million) and intragroup debt (325 million) into quasi-equity instruments. The landscape of the nickel industry in New Caledonia is bleak, with companies struggling to remain viable in the face of economic pressures and falling prices.
The impact of the nickel crisis extends beyond economic concerns, affecting the social fabric of New Caledonia. The industry plays a significant role in the lives of the local population, shaping their history and future. The current unrest and protests reflect the disappointment and frustration of the people, who had hoped for a more equitable distribution of wealth from the nickel industry. The crisis has reignited discussions around the future of the nickel sector in New Caledonia and the need for sustainable solutions to address the challenges facing the industry and the community.
The situation in New Caledonia highlights the complex interplay between economic realities and social dynamics, as the nickel industry’s decline has far-reaching consequences for the region. As global demand for nickel continues to rise, finding a sustainable path forward for the industry in New Caledonia becomes critical. The government, industry stakeholders, and local communities must work together to address the challenges facing the nickel sector and ensure a prosperous and equitable future for New Caledonia. Only through collaboration and innovation can the region navigate the current crisis and build a resilient and thriving nickel industry for generations to come.
