The French overseas territory of New Caledonia, also known as “the Rock,” holds nearly 15% of the world’s nickel reserves in its soil. Under the Fifth Republic, it also benefits from a unique and sui generis situation resulting from the Nouméa Accord of May 5, 1998. This process of decolonization without independence, initiated by former Prime Minister Michel Rocard, granted the island a high degree of autonomy and was intended to lead to full sovereignty through referendums, as stated in the Accord, 24 years later. However, the recent referendum, boycotted by the pro-independence movement in 2021, has undermined the spirit of the Accord.
In addition to the political crisis, the territory also faces economic challenges stemming from an imbalanced economic model that has been supported so far by significant financial inflows from private investments in metallurgical plants and government interventions. Without new transfers, this system is now on the brink of collapse. The crisis in the metals sector, influenced by the energy transition, has led major players like Glencore, a key shareholder in Koniambo Nickel SAS, to halt operations in the northern plant, awaiting a potential buyer. In the south, the announced disengagement by Eramet’s CEO from the Doniambo SLN plant and the uncertain fate of Prony Ressources NC, which recently secured government funding to survive until the year’s end, signal the slow decline of these three companies, posing a risk of deindustrialization for the territory.
The nickel industry plays a crucial role in New Caledonia’s trade balance, which is heavily in deficit. It dominates employment across the territory, excluding government roles, with a notable impact on the GDP by contributing nearly 20% in value. With this economic sector at a standstill, the entire local system faces disruptions, resulting in the insolvency of social security, health insurance, pension funds, and local governments. The future of New Caledonia remains uncertain, as the existing economic and political challenges have the potential to significantly impact the territory’s future development and stability.
The institutional organization of New Caledonia has placed the territory in a challenging position, where it is tasked with collecting taxes and distributing revenue primarily to the provinces. The provinces, in turn, have the freedom to spend these funds as they see fit, establishing financial power along with broad competences granted under the 1999 organic law, such as environmental protection, economic development, management of mineral resources, and granting of mining licenses. The intricate relationship between the central government, provinces, and the economic sector further complicates the territory’s current predicament and raises questions about its future direction and sustainability in the global market.
As New Caledonia grapples with political tensions, economic instability, and institutional challenges, the need for innovative solutions and long-term strategic planning becomes increasingly urgent. The territory’s heavy reliance on the nickel industry highlights the vulnerability of its economic model and the risks associated with a lack of diversification. Finding a sustainable path forward will require collaboration between the government, private sector, and local communities to identify new opportunities for growth, address social and environmental concerns, and build a more resilient and inclusive economy for the future of New Caledonia. The road ahead may be uncertain, but by leveraging its unique resources and strengths, New Caledonia has the potential to navigate through these challenges and emerge stronger and more prosperous in the years to come.
