New Caledonia

Business

Good news for New Caledonia

The world price of nickel is very important in New Caledonia, one of the world’s largest supplies, and is poten tially significant in the Solomons, possi ble site of a major new mine.

Recently the price has recovered to close to US$3 00 a pound after falling to a record low of $1.91/lb. in September of last year. Still the price is only half of its 1989 level (see chart) when it was over $6.00/lb.

A boost in nickel prices is good news for New Caledonia generally, and partic ularly for those associated with the giant, open-pit SLN mine opened recent ly 250 kilometres north west of Noumea (“Mine of the future”, PIM, August, 1994). That mine promises to create, directly and indirectly, close to 300 jobs in an area where well-paid jobs are scarce.

It is world conditions, not the pres ence of the new mine, that caused the rise in nickel’s price, according to a source in the U.S. Bureau of Mines, a government agency. Increasing manu facturing and building in both the U.S. and Japan, as well as increased activity

elsewhere in the world, have helped bring back the price.

There is, however, a major potential cloud on the horizon, being the state of the economy in the former Soviet Union, the largest single producer of nickel ore in the world. Although the general chaos in the area may have reduced nickel mining a bit, what is much more important is the much more

significant cutback in military spending,

so the ex-USSR is producing a much big ger surplus of nickel than ever before.

And because nickel is relatively valuable per pound, and never spoils, nickel sales are an excellent way for the ex-USSR countries to secure hard currency.

Meanwhile, nickel prices will have to recover further before the metal becomes of much value to the Solomons. The US-based Kaiser alu minum and steel interests are thinking about opening a nickel mine in the islands, but will not do so until the world price of the commodity increases some more - but how much an increase is needed before the mine is opened is anyone’s guess. ■