How Nickel Dispute Uncorked a Political Storm in French-ruled New Caledonia

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How Nickel Dispute Uncorked a Political Storm in French-ruled New Caledonia

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 How Nickel Dispute Uncorked a Political Storm in French-ruled New Caledonia


  • New Caledonia’s ruling coalition government collapsed after the resignation of pro-independence politicians.
  • There have been protests and violence over the proposed sale of nickel assets on the island.
  • New Caledonia is the fourth-largest producer of nickel and holds nearly 25% global estimated reserves of nickel.

The French-controlled island of New Caledonia is going through a political turmoil after its government collapsed after dispute over nickel assets sale. The crisis originated when five out of the total 11 members of the government executive resigned. The five members are part of UC-FLNKS and UNI-FLNKS (Union Nationale pour l’indépendance), which support the island’s independence from France.

Heart of the Conflict

The island in the Pacific Ocean is governed by France. As a semi-autonomous state, New Caledonia enjoys independence and depends on France for security and education. The island’s population of approximately 290,000 people is divided into anti-independence and pro-independence groups.

In the past few years, there have been two referendums, rejecting independence. The third one is scheduled during the current year.

Brazilian mining company Vale operates the Goro Nickel Project, which is located on the island. The project is considered to contain deposits that have the highest content of nickel. Vale operates the project through its subsidiary Vale Nouvelle-Calédonie S.A.S (VNC).

New Caledonia Nickel Mining Plant (Image Source: © THPStock

Vale is planning to sell the project owing to continued losses amid protests by the native community and arsons. The Vale management and the previous government had supported a bid for the acquisition of the project by a consortium including Swiss firm Trafigura, as a minor shareholder.

The pro-independence members of UC-FLNKS and UNI-FLNKS were backing a bid from local company Sofinor. They accused the French and New Caledonia leadership of favouring the consortium over the local company.

The conflict over the bid for the Goro Project led to a major disagreement between the pro-independence and anti-independence supporters.

Also read: ASX nickel stocks rally as underlying commodity clinches 52-week high

New Caledonia Hosts the World’s Best Laterite Ore Bodies

The Goro Nickel Project, which is counted as one of the best-known laterite bodies in the world, started commercial production in 2010. The project was designed with an annual production of 60 kt of nickel and 5 t of cobalt. The project has a mineral reserve estimate of 55 Mt.

Goro Nickel deposits have the highest nickel content with a grade of 1.4% nickel and 0.12% cobalt. The project has proven and probable reserves of 95.5 Mt.

Why Everyone is Going Gaga Over Nickel

The price of nickel crossed US$16,200 per tonne in November 2020, the highest figure in the last two years. Nickel is used in the stainless steel industry apart from battery manufacturing. The high demand for steel from China has also fuelled the demand for nickel.

According to data from the Resources and Energy Quarterly December 2020 Edition, the demand for nickel is expected to grow to 2.6 Mt or with 7% in 2022.

Nickel Outlook

Price and Production projection of Nickel (Data Source: Resource and Energy Quarterly December Edition)

There is huge upside potential in nickel as the demand for EVs and battery-based energy storage is gaining demand.   


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