New Caledonia’s Nickel Industry Faces Closure Amid Falling Prices and Competition
In the face of competition and a significant drop in nickel prices, New Caledonia's once-booming nickel industry stands on the precipice of collapse, potentially marking the end of the island's dominance in the global nickel market. The situation has prompted French Minister of the Economy and Finance, Bruno Le Maire, to propose the "nickel pact" as a last-ditch effort to save the island's three primary production plants. Despite the urgency, the New Caledonia Congress has delayed its adoption, leaving the industry in limbo.
The downturn has been accelerated by a 50% fall in nickel prices since late 2022 and stiff competition from Indonesia, putting the island's metallurgical sites and their 13,000 jobs at risk. Société Le Nickel (SLN), a historic player in the region, alongside Koniambo Nickel SAS (KNS) and Prony Resources, face critical financial challenges, with SLN entering conciliation proceedings and KNS searching for a buyer amid threats of closure.
The proposed nickel pact, involving significant energy bill subsidies and investment in new energy production capacity by the French government and Caledonian authorities, aims to mitigate these challenges. However, disagreements over the export of raw ore and the future direction of the industry have hindered progress.
The pact also encourages a shift towards producing "class 1" nickel, used in electric car batteries, as part of broader efforts to diversify the industry and reduce dependence on the volatile stainless steel market. Despite these initiatives, the high production costs and recent shifts in electric vehicle battery technology pose ongoing threats to the industry's viability.
New Caledonia's struggle highlights the complex interplay between resource wealth, environmental concerns, and economic sustainability in the face of shifting global markets and technological advances. The island's future as a nickel-producing region hangs in the balance, with the outcome of the nickel pact and the industry's ability to adapt and innovate remaining uncertain.
