France declared a state of emergency in response to violence in the French Pacific territory.

France has deployed police and military reinforcements in an effort to end days of unrest over Paris’s move to change the rules on provincial elections. The violence that escalated has resulted in the deaths of five people around the capital of Nouméa and was reported to be some of the worst unrest in the territory since the 1980s. The LME nickel price responded accordingly, jumping by over 6% as concerns grow that supply disruptions could occur.

New Caledonia is a French territory in the South Pacific and has been the subject of three independence referendums in 2018, 2020 and 2021. Each time, independence from France was rejected. Its wealth stems largely from its mining industry, which has struggled of late. New Caledonia is a significant producer of refined and intermediate nickel products based on its abundant laterite ore reserves.

Glencore used to produce ferronickel at its Koniambo plant before halting production and revealing it was searching for a buyer for its stake in Koniambo Nickel SAS (KNS) earlier this year. Elsewhere, Eramet formed Société Le Nickel (SLN) to produce ferronickel at the Doniambo plant, near Nouméa. In early April, Eramet reached an agreement to continue SLN’s operations while reiterating its decision not to provide any further financing to SLN. Mixed hydroxide precipitate (MHP) is produced by Prony Resources at the Goro plant, a consortium that brings together New Caledonian investors, with Trafigura and other international investors and was sold by Vale Nouvelle-Calédonie in 2021.

Despite French government support, New Caledonia’s nickel operations suffer from high energy costs, and like the rest of the industry, have come under increasing competition from lower-cost Indonesian nickel supply. According to statistics, laterite mine production fell by 26% in Q1 2024, compared to the same period last year.