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 $10,000 (9,000 euros) 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 $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.”which the archipelago has an interest.
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