In serious difficulty, the nickel sector on strike in New Caledonia

In New Caledonia, employees and subcontractors of the nickel industry went on strike on Thursday, January 25, to encourage the shareholders of the territory’s three refining plants, on the verge of bankruptcy, to participate in the recovery of the sector. The combination of poor yields, expensive energy and strong foreign competition have pushed the three factories (KNS, SLN and Prony Resources) processing the nickel extracted in the archipelago into the red, pushing the government to look into about their fate.

The movement was launched by the General Union of Industrial Workers of New Caledonia (SGTI-NC) and joined by an employers’ organization of subcontractors and economic interest groups. It did not cause any disruption to production or blocking of axes.

In Nouméa, around a hundred people gathered in front of the headquarters of Prony Resources, while in front of the factory, located in the south of the territory, around thirty demonstrators deployed mining equipment in front of the entrance to the site, without hindering the traffic. “We wanted to alert, but without penalizing production,” explained Glen Delathière, SGTI-NC union delegate at Société Le Nickel (SLN), the three factories being “in an absolute emergency.”

« Nickel Pact »

In New Caledonia, nearly 25% of jobs depend on mining and metallurgy, according to a report from the General Inspectorate of Finance.

A “nickel pact”, supposed to revive the sector, is under negotiation, at the initiative of the Minister of the Economy, Bruno Le Maire, who said in November that he hoped the negotiations would be successful by the end of January. The pact provides for a subsidy from the State and communities to lower the price of electricity, one of the main factors in the additional cost of New Caledonian nickel, and aid for the energy transition. Manufacturers also hope for direct financing, without which they consider immediate survival impossible. In November, Mr. Le Maire estimated the immediate financing needs of the three factories at 1.5 billion euros.

SLN, the historic industrialist, is heavily in debt, to the tune of €493 million, and its majority shareholder, Eramet, confirmed in October that it would not inject more money into its subsidiary. The cessation of payments is “only a matter of weeks”, according to the general director of SLN, Jérôme Fabre.

The Prony Resources factory is placed under ad hoc mandate (a preventive procedure for resolving difficulties intended for companies which are not in cessation of payments) with debt which reached 149 million euros at the end of 2022.

The ferronickel production plant Koniambo Nickel SAS (KNS) has a record debt of 13.7 billion euros. The Northern Province is a 51% shareholder. Glencore, a 49% shareholder, but which alone bears the financial losses, has already sunk 13.8 billion euros into the project, or 1.5 times the GDP of New Caledonia. KNS is now considering mothballing its industrial site.