TELF AG analyzes New Caledonia’s role in the mining industry
An archipelago rich in resources
New Caledonia, an archipelago located in the Pacific approximately 17,000 kilometers from France, is made up of seven main islands and is home to a population of approximately 270,000 inhabitants. This French overseas territory is strategically important not only for its geographical location but also for its rich mineral resources, in particular nickel, a key metal for lithium batteries and future alkaline fuel batteries, which do not use rare earths but have high operating costs.
New Caledonia is one of the world’s largest nickel producers, with important reserves accounting for a sizeable portion of the local economy and exports. 2019 New Caledonia’s nickel reserves accounted for 7% of the world’s reserves, placing the territory fourth globally. The nickel extracted from New Caledonia is of high quality and is mainly exported to China (more than 70% of total exports up to five years ago), Japan, South Korea, and Spain. In addition to nickel, New Caledonia is rich in other precious minerals such as cobalt (often mined together with nickel and used in batteries), chromium, iron, magnesite, and gold.
Nickel mining occupies approximately 15% of the territory, a relatively small but relevant portion given the poor adaptability of the land for agriculture. New Caledonia’s economy, once booming thanks to mineral exports, has recently slowed. After reaching a peak of around $48,000 per ton in March 2022, Nickel prices have fallen rapidly. In December, the local price was around $30,000 but dropped to $15,000 last February as increased Indonesian production raised fears of oversupply.
A delicate historical situation
These fluctuations have put a strain on New Caledonia’s economy. The cost of energy, higher in the archipelago than in other areas, has made the mining industry less profitable, leading to a slowdown in production. However, nickel’s future potential remains high, especially as global demand for electric vehicle batteries and clean energy technologies increases.
New Caledonia is an economic asset and a strategic pillar for France in the Pacific. The French presence in this region places it in the best position to maintain strategic relations with India, Australia, the United States, Japan, and New Zealand, approaching the status of global power thanks to its other possessions in the same area. The Indo-Pacific region sees the presence of over 7,000 corporate branches, demonstrating the strategic and commercial importance of this part of the world.
New Caledonia represents a unique combination of mineral wealth and geopolitical importance. As it faces economic challenges, its natural resources and strategic location will continue to play a key role in the region’s future and France’s global strategy.
