Nickel: why the sale of a Vale plant plunges New Caledonia into chaos

Posted on 20 Dec. 2020 at 11:00

What is happening in New Caledonia?

For several weeks, tensions have punctuated the life of Le Caillou. Mainly in the south, where roadblocks have been set up, access to industrial sites has been blocked, a gas station has been set on fire. Individuals broke into the company’s factory Vale in Goro, sabotaging facilities and infrastructure. The situation is such that the police and gendarmes had to intervene on several occasions to dislodge the intruders, they even opened fire during the evacuation of the Goro factory.

This violence, mainly due to independence activists and Kanaks, was “Strongly condemned” by the authorities on the spot, but also in metropolitan France by the Prime Minister, Jean Castex, questioned in the Assembly by a deputy evoking a situation “On the verge of political, economic and social chaos”. The Minister of Overseas, Sébastien Lecornu, multiplies calls for dialogue and says he is ready to welcome the independence leaders of the FLNKS. The latter have also ended up condemning the violence.

What are the reasons for these tensions?

It all has to do with the sale of the nickel plant, operated by Vale. The Brazilian group has decided to leave New Caledonia after having accumulated almost $ 2 billion in losses since 2014. In addition, the iron giant, shaken by the rupture of a mining dam in Brazil resulting in the death of 200 people, has decided to refocus on its profitable activities. After negotiations with an Australian junior failed, Vale considered another offer, made up of 50% Caledonian interests, 25% from Swiss trader Trafigura, with the rest going to a multi-party company. This project is supported by the Southern Province, owner of the basement, but also by the French State

Why are the separatists and Kanaks opposed to this offer?

The FLNKS separatists, but also the Usine du Sud collective = factory country and the indigenous customary negotiating body (Ican) denounce the presence of the commodity trader Trafigura within the consortium. They do not want to give up the riches of New Caledonia to “A Swiss multinational” splashed with scandals. They forget in passing that in the north of the archipelago, they had joined forces with the Swiss Glencore, whose reputation is far from being less sulphurous. To “To protect the Goro deposit from the growing inclinations of foreign multinationals”, opponents highlight the project carried by the Sofinor, representing the interests of the North Province, and their Korean partner Korea Zinc, who preferred to throw in the towel after the tensions.

Temporary nationalization

Faced with the situation, the deputies of New Caledonia Philippe Dunoyer and Philippe Gomes asked the State to take control of the Vale plant. “When the State judges that a strategic company is vulnerable, it can take control temporarily to save it and allow discussions to succeed”, argued Philippe Dunoyer. Such an operation is possible because the public authorities provide financial support of around 500 million euros.

This opposition is coupled with a political opposition which structures the history of New Caledonia between the northern provinces, controlled by the Kanaks and separatists, and the South, where the factory is located, led by the loyalists. Local politics is closely linked to nickel, which was already at the center of independence demands during the negotiation of the Matignon accords in 1988 and the Nouméa accord in 1998. These agreements, which put an end to years of tensions in the 1980s aimed, among other things, to rebalance the sharing of New Caledonia’s wealth and to favor the creation of added value in the archipelago. Le Caillou comes out of a second referendum on independence in which the “no” narrowly won.

What does nickel represent for the archipelago?

It is the main source of income in New Caledonia, which concentrates nearly 25% of the world’s resources of this metal used to manufacture stainless steel and batteries for electric cars. At the three main sites, the extraction and processing of the ore employs nearly 6,000 people.

However, the economic benefits did not live up to expectations, as a resident of Goro sums it up: “There have been many transformations since the construction of the factory, the social environment has deteriorated and the majority of young people have not found a place in the mining sector. The situation is more complicated than before. “

Caledonian nickel is further exposed to low-cost competition from Indonesia, the Philippines and China. These countries are ramping up production to meet the demand linked to the rise of electric cars. New Caledonian factories are all the more vulnerable as they are not very competitive because of the astronomical cost of energy on this island located in the middle of the Pacific, but also the cost of labor and stricter environmental requirements. . SLN, a subsidiary of Eramet, is carrying out restructuring plans, while the other sites have never been profitable or achieved their production targets.

Finally, although the ore is an important source of income for the island, its extraction and processing generate significant pollution, especially for the local populations who live near industrial sites. The Vale plant, which practices hydrometallurgy – this consists of purifying the ore with acid – is located a stone’s throw from the Kanak homes. Several leaks have already been observed.

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