New Caledonia hit by nickel industry slump

Press, 28 October 1982, Page 20

New Caledonia hit by nickel industry slump

From

ROY VAUGHAN

in Noumea . New Caledonia faces an economic crisis. The world recession has hit its biggest industry, nickel mining, forcing the State-owned S.L.N. Nickel Company to cut production by about a third. Nickel mining and processing are the backbone of New Caledonia’s economy. S.L.N. has a $250 million annual budget and pays out about $BO million a year in wages. Now it is talking of laying off 500 to 600 of its workers. It is the biggest employer of labour in New Caledonia with about 3000 people on its payroll, according to its public relations officer, Mr M. Girold.

The industry has been hard hit by several factors and residents openly talk of its being a crisis. High wage costs — the average worker gets about $l5OO a month — and high dependence on expensive imported oil, are also big factors.

The full social, economic and political effects of the problem have yet to be

gauged: on present estimate S.L.N. believes it will be two years at least before the industry revives again. New Caledonia may export some of its redundancy. Forty per cent of the nickel workers are European and about 25 per cent Polynesian. They have the option of returning to France or French Polynesia to find new employment. Probably most of them now firmly regard themselves as New Caledonians and see their future in New Caledonia — for better or worse.

S.L.N.’s huge furnace plant dominates the Noumea waterfront, just as the wage packets of its workers dominate the city’s economy. Nickel constitutes 95 per cent of all New Caledonia's exports. A third of all known nickel resources in the West are in New Caledonia and the industry undoubtedly has a tremendous future.

However, local politicians already question whether things are being run in the best interests of the territory.

High energy costs are a big problem and while New Caledonia's 300 or so private mining companies are talking of a joint-venture smelter in New Zealand to take advantage of relatively cheap hydro-electricity, S.L.N. is wedded to its present process.

Processing by S.L.N. in New Caledonia is taken only to the ferro-nickel and the matte stage. Ferro-nickel and matte is then shipped to the company’s Sandouville refinery at Le Havre to be turned into high-purity electrolytic nickel. There are also by-products of iron, and cobalt.

Mr Girold says production at the Noumea factory will be cut from about 3000 to 2000 tonnes a month next year. An enormous amount of ore has to be extracted to produce this and two 15,000ton coastal ore carriers are kept fully employed supplying the Noumea works with ore from the main mining ports of Thio, Kouaoua, Poro and Nepoui.

New Caledonia’s nickel ore is some of the richest in the

world but it has only a 2.5 per cent nickel content. Only the richest ore deposits are now being worked, mostly on the tops of razor-backed mountain ranges where bulldozers and huge cranes cut giant terraces into the hillside.

During the last few years, ore production has averaged about six million tonnes a year but about 13 million tonnes of waste has to be dumped in the process of getting the ore, causing frightening erosion and pollution.

S.L.N. and other companies are now having to pay the heavy price of environmental pollution-control measures. Almost everywhere the scarred hillsides, slag-choked rivers, and dust-covered bush are visible.

Another problem arises because the ore layers are not very thick and an estimated 22ha of land has to be stripped to produce a million tonnes of ore.

A variety of environmental control measures are used, including stabilising dams,

and S.L.N. is committed to spending millions of dollars a year to try to prevent damage.

While many of the private mining companies are looking to New Zealand for new smelting furnaces, S.L.N. aims to make more use of New Caledonian-produced hydro-electricity.

At present, less than 10 per cent of all electricity used at S.L.N.’s Noumea plant is hydro-sourced. Its 11 furnaces need enough electricity to keep a modem city of 550,000 people supplied. A new dam is planned to produce a further 10 per cent of the factory’s needs, so that ultimately S.L.N. may be able to use hydro-electric power for about 30 per cent of its needs. ■

Its Noumea plant can handle a maximum 75,000 tonnes of nickel a year but production was only 35,000 tonnes last year.

The modem electric furnaces were installed in the mid-19705.

S.L.N. also exports about 200,000 tonnes of ore a year to Japan. New Caledonia's private miners now produce about 1.5 million tonnes of ore a year and sell all their product to Japan in the raw state.

Quite apart from its economic problems, S.L.N.’s future is closely woven with the political future of New Caledonia. Its paid-up capital of about a billion francs is owned in equal proportions by two shareholders, Societe Imetal and Societe Nationale Elf Aquitaine. Through the two shareholders, the French Government directly holds about 70 per cent of the shareholding. New Caledonia’s Independence Front believes that all the territory’s land and mineral resources belong to the people of New Caledonia and problems are likely in trying to decide whether the French Government's shareholding should stay where it is or perhaps be bought by, or handed to, New Caledonia.

One thing is certain — New Caledonia’s huge nickel reserves have a vital strategic importance for the West and will be of considerable importance for many decades.

That makes political developments in New Caledonia and S.L.N.’s production crisis of appreciable importance to the rest of the world.