New Caledonia strike impacts world nickel supplies
An ongoing strike in the French Overseas Territory of New Caledonia, primarily over the employment of Filipino workers on the construction of Inco’s Goro Nickel operation, has been seriously impacting that country’s nickel exports. The strike has been going on for three weeks now and has forced the country’s principal nickel producer, Eramet, to suspend firstly its exports to Asia, and more recently its exports of ferronickel to Europe. This is having a knock-on effect on the nickel price. Nickel is already in extremely short supply, with demand exceeding supply and LME stocks extremely low.
The nickel cash price on the LME at the time of writing was just under £33,000 a tonne, only a little below its peak recorded earlier this year, while LME stocks were at only 4,986 tonnes.
New Caledonia is the world’s fifth largest producer of mined nickel with about 8% of world supply last year.
Radio New Zealand reported Friday that New Caledonian police acted to end a blockade of the Societe Le Nickel (SLN) nickel processing facility in the island’s capital, Noumea. SLN, which is 60% owned by Eramet, is reported as losing US$1 million a day because of the strike.
However, as a result, Union leader, Sylvain Nea, has warned of a sharp response to the police action and that there will be no more nickel leaving the plant next week. He has warned SLN that it should now prepare a shutdown to its furnace at the plant where there is only sufficient ore stockpiled to keep the smelter going for a further week.
The union’s main dispute is not actually with SLN at all, which is particularly galling for the company. The principal demands are for the immediate departure of Goro’s Filipino workers, the construction of a new nickel smelter in the north of the island and measures to reduce the high cost of living there.