Despite a tropical cyclone threatening destruction on the French territory of New Caledonia, the island faces even steeper problems as of late. Several of the region’s pro-independence politicians had recently resigned from their positions, following a cascade of economic problems and social unrest over the sale of nickel assets.
According to Reuters, New Caledonia, which is located approximately 1,200 km east of Australia in the Pacific Ocean, has been the subject of mass riots after the archipelago’s mining assets were the subject of an unfair sale process. Vale, the Brazilian mining company that has managed the Goro nickel smelter in the region’s southern province, has underwent years of financial losses and conflicts with indigenous Kanak communities. As a result, the company plans to sell out to a consortium of potential buyers, including Trafigura, a Swiss commodities trader.
However, news of the potential deal were met with further opposition from New Caledonia’s Indigenous Kanak leaders, whom had initially anticipated that the bid would favour local majority ownership under the control of the island. As a result of the increasingly-escalating disputes, a number of pro-coalition political figures resigned, resulting in a collapse of New Caledonia’s coalition government. The recent collapse will likely delay the anticipated sale of the nickel property, and could potentially lead to a reduction in supply from the region.
New Caledonia is the fourth largest nickel producer in the world, following Indonesia, the Philippines, and Russia. The metal is used in a number of products, including stainless steel and electric vehicle car batteries, and its global demand is expected to surge significantly.
Information for this briefing was found via Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
