France
Global nickel prices have soared since deadly violence erupted in the French Pacific territory of New Caledonia last week.
This overseas territory, under French domination for more than 170 years, is one of the world's main producers of this material essential for the manufacture of electric vehicle batteries , solar panels , steel and other materials. commonly used items.
Here's a look at the global importance of New Caledonia's nickel industry and why social unrest in the territory has impacted prices.
Why are there demonstrations in New Caledonia?
Riots broke out after French MPs approved changes to the French Constitution that would allow residents who have lived in New Caledonia for 10 years to vote in provincial elections.
Opponents fear the measure will benefit pro-French politicians in New Caledonia, where pro- independence Kanaks have long lobbied for freedom from France.
The Kanaks seek independence for this archipelago of 270,000 inhabitants , while many descendants of colonizers and other non-native people who settled on the island want to remain part of France.
On May 15, France declared a minimum 12-day state of emergency on the island. She urgently sent a thousand soldiers to reinforce the security forces who had lost control of certain districts of the capital, Nouméa .
Global market
New Caledonia holds between 20 and 30% of the world's nickel reserves . It is an important part of the archipelago's economy, accounting for up to 90% of its exports and employing around a quarter of its workforce.
The European Union has designated nickel as a critical raw material , meaning it is economically and strategically important to the European economy, but its supply is considered high risk.
"Part of the discussion around France's desire to maintain its control over New Caledonia is motivated by its hope of securing the important nickel deposits there, perhaps with a view to future production of electric vehicles ,” says Nicholas Ferns, a researcher at Monash University in Australia .
The United States and EU member states have been scrambling to secure their own supply chains for critical materials to catch up with China, which controls or has invested in much of the world's supplies.
In 2021, electric vehicle manufacturer Tesla invested in the Goro nickel mine when it was sold to a local consortium majority-owned by local players.
Price increase
Concerns over supply disruptions from New Caledonia due to the unrest and sanctions imposed by Russia on metals including nickel have pushed global prices above $20,000 per tonne for the first time since September.
The price of nickel on the London Metal Exchange rose from $18,510 on May 8 to $21,275 per metric ton on Tuesday.
The price rise came as the Paris-based International Energy Agency said in a report that there could be future supply shortages of key materials - including nickel - due to “rapid” growth in EV demand, mine closures and slowing investment.
The link between nickel and riots
Although wild fluctuations in commodity prices are disruptive to industries, New Caledonia's nickel industry was struggling even before the political crisis , due to a 45% drop in global nickel prices. last year.
The economy of New Caledonia, dependent on the nickel industry, was shaken. New Caledonia's mining industry has struggled to compete with Indonesia , the world's largest nickel producer, due to decades of export restrictions and high energy costs that have made nickel production more expensive and less expensive. profitable.
“The nickel industry is inevitably linked to the debate on the independence of New Caledonia ,” maintains Nicholas Ferns. “The decline in nickel prices in recent years has exacerbated economic problems in New Caledonia, which can then be linked to some of the factors involved in the recent riots.”
The French government is committed to helping maintain the activities of the territory's nickel industry through subsidies.
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