Nickel, Riots and the Fight for New Caledonia’s Clean Energy

Courtesy of the Wall Street Journal, a report on France’s plan to lift restrictions on exports of New Caledonia’s nickel to supply clean-energy manufacturing, which is drawing condemnation from indigenous leaders:

Before riots swept New Caledonia last week, President Emmanuel Macron aimed to put the remote territory—and its massive reserves of nickel—at the center of France’s push to secure raw materials for the clean-energy transition and compete against China in manufacturing electric vehicles.

Those plans are colliding with a hard-line local political movement that seeks independence from France and is refusing to go along.

The rioting exploded after lawmakers in Paris approved legislation to give more voting rights to New Caledonia’s nonindigenous population, diluting the influence of the native Kanak people. At the same time, pro-independence parties are fighting a French proposal that would lift restrictions on exporting unprocessed nickel and prioritize shipments to European electric-vehicle battery factories.

“Nickel is wealth for New Caledonia,” Macron said last year on a trip to the Pacific archipelago. “It is also, and I emphasize this, a major strategic resource for France and Europe, at a time when we have undertaken a massive reindustrialization effort.”

Pro-independence leaders denounced the French plan when it was unveiled in March. Ronald Frère, a founding member of one of the pro-independence parties, called it a “colonial pact to regain control of New Caledonia’s resources.”

Six people have been killed and hundreds injured during the unrest, which continued over the weekend. Interior Minister Gérald Darmanin on Sunday said 600 police officers had been deployed to secure the road between the airport and the capital, Nouméa.

The rioting is a blow to France’s plans to use its overseas territories to counter the influence of China in the Indian Ocean and the Pacific, what Paris calls its Indo-Pacific strategy. The vast region is home to some of the world’s richest mineral deposits. Chinese companies have invested heavily in Indonesia’s nickel sector, transforming the country into the world’s largest producer of the metal and a major supplier to China’s electric-vehicle factories.

French officials have responded with a plan to embrace New Caledonia and dilute the influence of the independence movement. “Questions of independence are questions of decades past,” Macron said. “If independence means choosing tomorrow to have a Chinese base here or to be dependent on other fleets, good luck!”

The archipelago’s residents have voted three times against independence from France, most recently in 2021 in a referendum that was boycotted by pro-independence parties. Those votes preserved the status quo that gives New Caledonia significant autonomy and control over its nickel resources, which have long been the lifeblood of its economy.

New Caledonia is the world’s third-largest producer of primary nickel, which includes raw ore and lightly-processed forms of the metal. Demand for nickel has surged over the last two years because it is a critical material for clean-energy technologies, mainly lithium-ion batteries that power most of the world’s electric vehicles. The International Energy Agency says demand for nickel in EV batteries will more than quadruple by 2030 as governments push consumers to buy electric vehicles.

But for now, New Caledonia’s industry is in deep trouble. A surge of new production from Indonesia and a slump in the electric-vehicle industry have sent nickel prices plunging, down by nearly 40% since the start of 2023. New Caledonia’s energy and labor costs are far higher than Indonesia’s, while the nickel content of its ore is falling. The archipelago’s three nickel processing plants are all losing money.

The situation has cast a pall over the territory. It became more dire in February when Swiss mining giant Glencore decided to stop production at an unprofitable nickel mine and processing plant in northern New Caledonia. Glencore has said it would seek a buyer for its stake in the operation.

A silvery-white metal, nickel has been at the heart of France’s experience with New Caledonia for a century and a half, when it was first discovered there shortly after France annexed the territory in 1853. The metal eventually became the territory’s biggest export.

France has long sought to keep control of the valuable Pacific archipelago, one of a handful of colonies it held on to after World War II. During the nickel boom of the late 1960s, the government encouraged a surge in French migration to the territory, in part to diminish the influence of the native Kanak population, said Pierre-Yves Le Meur, a New Caledonia-based anthropologist and senior researcher at the French National Research Institute for Sustainable Development.

“This was a deliberate strategy to dilute the Kanak majority and secure control over the valuable nickel deposits,” Le Meur said.

That migration was one of the sparks of a wider independence movement in New Caledonia, growing and leading to violent clashes in the archipelago in the 1980s. By the late 1990s, pro-independence leaders were able to push France to put limits on exportation of raw nickel to spur the creation of local nickel-processing plants.

The nickel industry now accounts, directly and indirectly, for roughly a quarter of the territory’s jobs.

Shipments of raw nickel are among the points of tension over France’s plan to invest in the local industry, which Macron’s government has dubbed the “nickel pact.” In addition to requiring financial contributions from New Caledonia’s government, the French plan would allow shipments of raw nickel to European markets and elsewhere, which some local leaders said would undercut local processing factories.

It was against that backdrop that France’s decision to enlarge the voting pool in the country, effectively reducing the voting share of native people, sparked protests that later degenerated into riots.

“The nickel market has worsened the overall economic environment,” said Jean-Michel Sourisseau, a researcher at the French Agricultural Research Center for International Development, “and made the situation more delicate and explosive.”



This entry was posted on Monday, May 20th, 2024 at 4:27 am and is filed under New Caledonia.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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