Persuasion - nickel-plated but friendly

Early February brought new de velopments on the New Caledonian nickel scene, regarding plans for the garnieritic reserves around Poam- Koumac in the north and the lateritic deposits surrounding Goro-Port Boise, in the south.

A statement from INCO finally indicated a timetable which the North American nickel company could follow in setting up its factory in the south. The whole INCO project, however, depends on the French tax terms as well as on the government’s making available the reserves cur rently held by the state mining bureau, BRGM. The French Govern ment had already proposed to INCO that they should seek an agreement with the Franco - American project being studied by SNPA (Aquitaine petrol) and Freeport Minerals, for both sides to work the BRGM de posits together.

Meanwhile, should INCO be satis fied with French terms for its entering

New Caledonia, the world’s biggest nickel company has now stated it could start construction of a factory in 1974. The necessary complex could be finished to permit initial output late 1977 at the rate of 20,000 tons of nickel metal annually, with the possibility of rising to 50,000 then 100,000 tons.

To the Caledonians, this is still far from the final word on the subject, as a decision was awaited on possible co-operation with the Aquitaine- Freeport venture.

As far as northern development of the island is concerned, latest state ments on the area were made in Koumac early February by repre sentatives of the SOMMENI com pany, flown out from Paris and accompanied by top members of the French Administration from Noumea.

Governor Louis Verger was sup ported by eight public service chiefs and other officials when he flew north

to announce project details to the in habitants of Koumac. (The town is 250 miles north of Noumea, on the island’s west coast.) The governor was joined on the trip by seven repre sentatives of French companies in volved in the SOMMENI joint ven ture, formed by French COFREMMI (Patino subsidiary) and Pechiney- Ugine Kuhlmann, together with Swedish Granges.

To the Noumea press, this heavy battery of public servants accom panying the governor and mining executives indicates a mighty public relations effort which they code named “Operation Persuasion”—to try to convince the Caledonians that this time the Administration meant what it said, that the project would come off.

President of the SOMMENI con sortium, Mr Rene Michel, announced the expected timetable for his group’s project: 1973—port and factory site studies scheduled, with the first call

for tenders and placing of orders; work to begin in the second half of this year; 1974—construction of port and factory to proceed; 1975 —end of construction work and beginning of production with the first metal out put planned for December, 1975.

The project manager, Mr Jerome Pelissier-Tanon, pointed out that the new factory was planned to produce 36.000 tons of ferronickel per year.

French public service chiefs amplified the company’s statements by describ ing the ore reserves—eight years’ supply to be mined first from the rich (3 per cent) Tiebaghi area, then 17 years’ supply from poorer reserves (2.3 per cent) at Poum.

Members of the French Adminis tration also explained how they en visaged future urban development, which would increase Koumac’s population from the present 200 to 5.000 dwellings. The whole discussion of the transformation Koumac resi dents could expect was attended by French heads of the Caledonian de partments of mines, lands, agriculture, jyouth and sports and other officials. [ Several members of the island’s Territorial Assembly attended this un ravelling of plans for the new nickel factory, but local TV and press coverage showed that Caledonian ! elected representatives have only a minor role to play in Paris plans for ■ the territory. It was officially an nounced that the Koumac develop ment plan would be submitted to the local municipal council in early March, but the project will not be submitted for approval by the Terri torial Assembly until May. In the [meantime, it is planned to call for the first tenders in April, with con struction of the first dwelling to begin by the end of this year.

Second bid for

oil in Tonga

Drilling for oil on Tonga’s main island of Tongatapu, on land and off shore, suspended early in 1972, will be resumed in June. A consortium lof six companies started exploration in 1971 and drilled two holes. Work was suspended when Tonga Shell MV Ltd, a major partner in the con sortium, pulled out. Ampol has taken over half of Tonga Shell’s sharehold ing, and the other half is expected to be acquired by one of the other re maining companies—Republic Mineral i Corporation, Gulf Oil, British Pet roleum or Aquitane—or a new com pany before drilling resumes. Tonga believed it had joined the oil-rich king doms when oil was discovered seeping through the ground but, so far, drill ing has drawn a blank.

Islands affected by

dollar changes

The Pacific Islands had barely sorted out the effects of the December 23 revaluation of the Australian dollar when they were hit, on February 12, with devaluation of the US dollar. Japan floated the yen next day and it appreciated. Australia and New Zealand “stood pat”, in effect devaluing against the yen and revaluing against the US dollar. To complicate matters further, sterling, which has been floating since the middle of 1972, continued a weaken ing trend. In relation to the Aus

tralian dollar it devalued 7 or 8 per cent. Fiji, tied to sterling, found its. currency devalued against the Aus tralian dollar.

Preliminary assessments suggested that most Island groups would have to pay more for their imports, but their exports would earn less. In some areas there were minor gains.

The net effect of Australia’s December revaluation and the “stand pat” of February, meant an effective revaluation of 20 per cent against the US dollar. Bougainville Copper can expect a 20 per cent cut in earnings, unless the contracts, most of them written in US dollars, are rewritten.

This company, however, will now be

able to make lower repayments on foreign loans.

Primary producers in Papua New Guinea and the BSIP will earn less in their traditional markets in the UK, and also in the US. Imports from those areas will be cheaper.

Imports from Japan will be dearer, but exports will earn more than be fore the yen floated.

Fiji’s Finance Minister, Mr Charles Stinson, held Fiji on parity with sterling, at least till a central mone tary authority is set up. Legislation to set up the authority is before parliament. He said revaluation would mean lower prices for sugar and copra. Holding the same parity meant higher prices for imports from Australia, New Zealand, Japan, Malaysia and Singapore. He sug gested that importers might have to look outside the traditional sources of supply—ie buy from the US and the UK instead of NZ and Australia.

Fiji will have to pay more for Japanese imports for the tourist trade.

As Fiji will become cheaper for Aus tralian tourists this might make up some of the difference. But Americans will have to pay more for a South Pacific holiday and could lose some interest in dearer duty-free goods.

New Caledonia and French Poly nesia devalued 4.9 per cent against Australian currency, but revalued about 5.5 per cent against the US dollar, to put themselves in the same position as Fiji. American Samoa is in the same position as the US— dearer imports and cheaper exports.

Western Samoa made no moves, and that country’s exchange rates were un quoted, at least for nine days after US devaluation.

The Cook Islands, which uses NZ currency, is in the same position as New Zealand. Her exports will be dearer and her imports cheaper.

Tonga applies its own exchange rate to foreign transactions, which are conducted in Australian dollars, and made no announcement about the possible devaluation/revaluation moves.

The future of several South Pacific currencies is uncertain. Australia may yet have to revise its decision not to move in face of criticism within the Cabinet and from com merce and agriculture. An exchange rate for sterling could be fixed at any time, and Fiji may soon be able to fix its own rates.

The currency “crises” of December and February created business ten sion, with external dealings in countries affected practically coming to a standstill. In the latest crisis Fiji’s trading banks closed, except for internal business and issuing travellers’ cheques, from Feb 13 to 16.