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Unrest In A French Territory Is Driving Up The Price Of Nickel
Alexander C. Kaufman
Wed, 29 May 2024 at 7:53 pm GMT-4·10-min read
The deadly riots that broke out earlier this month in the French territory of New Caledonia are pushing up the price of nickel, a key metal needed to transition off fossil fuels that has gotten more expensive as global conflicts affect the market.
The South Pacific archipelago, located roughly 1,000 miles off Australia’s east coast, was the world’s third-largest producer last year of nickel. The metal is used for everything from steelmaking to solar panels, but is particularly prized as an ingredient in batteries for large machines like electric vehicles, allowing them to last longer on a single charge.
Nickel prices dipped last year as electric car sales stalled out, allowing a surplus to pile up in warehouses around the world. But prices spiked again in February, when Swiss mining behemoth Glencore announced plans to exit New Caledonia and sell its half of one of the territory’s biggest mines.
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Then, in April, new Western sanctions against Moscow prompted the Chicago Mercantile Exchange and the London Metals Exchange the largest U.S. and world markets for options and futures contracts on metals, respectively to ban Russian-produced nickel. With projected demand for nickel already outstripping the world’s current planned supply, cutting a major producer out of the market hiked prices.
Now, simmering unrest in New Caledonia, which some commentators have likened to a dawning “civil war,” has prevented any shipments or production of nickel, sending the price of the metal surging by more than 7% in recent weeks. It’s just the latest squeeze, but raises doubts over the West’s capacity to rewire supply chains and reduce dependence on geopolitical rivals such as China and Russia.
Anticolonial Backlash
Protests broke out in early May after French President Emmanuel Macron moved to pass legislation that would deflate the political power of the native Kanak people, seemingly thwarting their hopes of gaining independence from the European power that conquered their homeland 171 years ago.
France retains more than a dozen overseas territories as a legacy of its empire, which crumbled after World War II. As the U.S. did with Hawaii and Alaska, France fully incorporated five of its territories in the Caribbean, South America and the Indian Ocean into its political structure. Other French colonial islands, mainly in the Caribbean and South Pacific, assumed a secondary status as “overseas collectivities,” akin to America’s relationship with Puerto Rico or Guam.
After slotting New Caledonia into that latter category in 1946, France granted the Kanaks citizenship and allowed the ethnically Melanesian natives to live freely outside the tightly controlled reservations to which they were confined following colonization in 1853. Kanaks enjoyed a slight majority over non-native settlers, mostly of European descent.
In the 1970s, a nickel boom spurred by U.S. demand for weapons in the Vietnam War brought an influx of roughly 25,000 migrants from Europe and across the region to New Caledonia, a territory of about 80,000 at the time. Kanaks became a minority in their homeland.
Police patrol a street blocked by debris and burnt out items following overnight unrest in New Caledonia on May 18, 2024.
Police patrol a street blocked by debris and burnt out items following overnight unrest in New Caledonia on May 18, 2024. DELPHINE MAYEUR via Getty ImagesMore
In 1980, the neighboring island chain of Vanuatu declared its independence from France. Inspired by that, and by other anti-colonial struggles in formerly French-ruled Algeria and Vietnam, Kanak nationalists launched what one historian called a series of “extraordinary confrontations” in New Caledonia, “marked by hostage-taking, blockades and assassinations.”
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