Nickel cri­sis rocks Pa­cific French is­lands that de­pend on the me­tal’s for­tunes

The China Post - - BUSINESS - BY CLAU­DINE WERY

Plung­ing nickel prices and the mar­ket woes of world min­ing giants have shaken the French ter­ri­tory of New Cale­do­nia, a trop­i­cal ar­chi­pel­ago in the Pa­cific that is hostage to the me­tal’s for­tunes.

Though best known for its stun­ning la­goon, pris­tine beaches and di­verse wildlife, New Cale­do­nia’s econ­omy ac­tu­ally re­lies heav­ily on nickel, dis­cov­ered here in the 19th cen­tury.

The price of nickel — es­sen­tial to the man­u­fac­ture of stain­less steel — has plunged 35 per­cent so far this year to a six-and-a-half year low of less than US$10,000 a tonne.

A slow­down in eco­nomic growth in China, the world’s big­gest con­sumer of nickel, and stock­piles of the me­tal amount­ing to more than 450,000 tonnes, have de­pressed the mar­ket.

“We were al­ready in a de­te­ri­o­rat­ing sit­u­a­tion when the cri­sis hit be­cause ev­ery sec­tor was in a slow­down. I think we are not far from zero eco­nomic growth,” Cather­ine We­hbe, di­rec­tor of the em­ploy­ers’ fed­er­a­tion Medef in New Cale­do­nia, told AFP.

The fed­er­a­tion is call­ing for a cut in gov­ern­ment spend­ing and for New Cale­do­nia’s econ­omy to be diver­si­fied, mov­ing away from what it de­scribes as an “all nickel” men­tal­ity.

The ar­chi­pel­ago, which has an es­ti­mated one-quar­ter of the world’s nickel re­serves, fret­ted this week as mar­ket tur­moil en­gulfed An­glo-Swiss min­ing gi­ant Glen­core, which owns 49 per­cent of the Ko­ni­ambo Nickel smelter in the north of the ter­ri­tory.

Glen­core shares plunged 29 per­cent in Lon­don on Mon­day but re­gained the losses later in the week af­ter protest­ing that it has “no sol­vency is­sues.” Its shares have nev­er­the­less tum­bled by about 70 per­cent this year.

Glen­core has in­vested more than US$7 bil­lion in Ko­ni­ambo Nickel, which has been trou­bled by tech­ni­cal dif­fi­cul­ties as it seeks to ramp up pro­duc­tion.

Though the com­plex is 51-per­cent owned by the North­ern Province pop­u­lated mostly by the in­dige­nous Kanak peo­ple, Glen­core pro­vides 95 per­cent of the fi­nanc­ing.

‘We are all scared’

On Mon­day, the head of Glen­core’s nickel unit, Kenny Ives, met with French Over­seas Ter­ri­tory Min­is­ter Ge­orge Pau-Langevin. No de­tails of the talks were re­leased but spec­u­la­tion about Glen­core’s fu­ture in the pro­ject runs rife on the ar­chi­pel­ago.

“We know they did not buy Ko­ni­ambo to lose money,” said Yann Vu Van Lang, union rep­re­sen­ta­tive at the smelter. “To­day, we are all scared.”

New Cale­do­nia’s his­toric nickel pro­ducer SLN says it is los­ing about 12.5 mil­lion eu­ros a month and shares in its Paris-head­quar­tered par­ent com­pany, min­ing group Eramet, have fallen 50 per­cent so far this year.

“It is a deep cri­sis. To­day, 80 per­cent of nickel pro­duc­ers are los­ing money,” said Daniel Ka­trawa, gen­eral sec­re­tary of SLN.

Brazil­ian multi­na­tional miner Vale warned in Jan­uary that 2015 would be a decisive year for its smelter, which is in­creas­ing out­put in the south of the ar­chi­pel­ago. Vale has in­vested more than US$7 bil­lion in the is­land but the com­modi­ties crash has squashed its am­bi­tions to break even for now.

The group, its shares now at a 12-year low, will re­view all of its projects in Novem­ber.

Pri­vate ore ex­porters, whose ma­jor cus­tomers are Ja­pan and Aus­tralia, hope they will be able to keep go­ing, so long as the cri­sis does not en­dure.

The ex­porters’ key con­cern is the fail­ure of lo­cal lead­ers to agree on a min­ing strat­egy.

“We have no vis­i­bil­ity on what they want to do with us,” said Xavier Grav­e­lat, head of the ore ex­porters’ syn­di­cate.

The or­gan­i­sa­tion wants to be able to ex­port nickel ore freely to China, a route that has pro­voked con­tro­versy within the gov­ern­ment, with some lead­ers fear­ing that selling ore to China would lead to selling the re­source off too cheaply. A draft ac­cord has been signed but is now bogged down in le­gal and po­lit­i­cal rows.

AP

In this April 21, 2010 file photo, the Deep­wa­ter Hori­zon oil rig burns in the Gulf of Mexico, more than 80 kilo­me­ters (50 miles) south­east of Venice, Louisiana.

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