Nickel Prices Soar Amid Unrest in New Caledonia

Nickel prices on the London Metal Exchange surged more than 5% on Friday amid violent protests and riots in New Caledonia. New Caledonia will become the world’s third largest nickel producer in 2023.

Nickel prices rose nearly 7% to US$21,150/ton, before falling back to US$20,880/ton, an increase of approximately 5%. Gains in futures contracts were supported by concerns about further supply disruptions in New Caledonia, as well as the International Energy Agency’s forecast of “rapid” growth in electric vehicle demand, mine closures and slowing investment leading to future supply shortages.

French miner Eramet operates five nickel mines in the country through its subsidiary SLN. The company has halted production due to falling prices, with exports falling to 200,000 wet tonnes in the first quarter of 2024. This is a 62% decrease from the same period last year. Eramet said that in the first quarter, London Metal Exchange prices fell by 36% year-on-year, and SLN ore prices fell by 33%. However, ahead of political unrest in New Caledonia, the company expected “a more positive outlook for the second quarter.”

he International Energy Agency believes that if the current low nickel prices persist, about 25 operating or potential mines, mainly located in New Caledonia and Canada, are still at risk of closure. The impact of these potential supply disruptions will be felt in the medium to long term, with Indonesia dominating what some in the industry call “dirty nickel” due to its carbon footprint.

Although the French government has pledged to provide subsidies to help keep operations afloat, the French territory’s economy has taken a turn for the worse as nickel prices have fallen. France has sent troops to regain control of a main road leading to the airport as unrest intensified, leaving six people dead.