Finance minister Bruno Le Maire and Home Affairs and Overseas minister Gérald Darmanin, at New Caledonia's Prony nickel plant in November 2023. Photo: Supplied
Analysis - French Home Affairs and Overseas minister Gérald Darmanin has confirmed on Wednesday he will once again visit New Caledonia next week, on 20 February, as the French Pacific entity is facing pressing issues on economic and political levels.
New Caledonia is still under the shock of a major setback for its troubled nickel industry: a major shareholder for its Northern Province Koniambo nickel (KNS) mine, Anglo-Swiss giant Glencore, earlier this week confirmed it will withdraw after a six-month "transition" period, leaving over 1200 workers and another 600 sub-contractors.
Glencore (which owns 49 percent in Koniambo), justified its move by the fact that this operation, over the past ten years, had never been neither profitable nor sustainable and had accumulated losses to the tune of 14 billion Euros.
Glencore's decision came as the French government's finance ministry had put on the table a 200-million-euro rescue package to help New Caledonia's nickel industry to become more competitive and produce cheaper nickel.
Major mining company sells stake in New Cal's nickel operation
The Koniambo mining plant would now be placed in "care and maintenance" mode and salaries for core employees would be maintained for the next six months, Glencore pointed out.
Since the dramatic announcement, New Caledonia's local government has activated what it calls a special unit to "accompany and follow-up" affected stakeholders and employees of the nickel industry.
The new unit would meet once a week from now on and would not only focus on Koniambo, but also on the critical situation the other two major nickel mines (both located in the South of the main island, one, Société Le Nickel -SLN- owned by French mining giant Eramet and the other Prony Resources, partly own by Swiss trader Trafigura) in New Caledonia are also facing.
SLN and Prony are also facing short-term deadlines, but have recently obtained assistance, at least for the next few months to avoid bankruptcy.
In this context, Darmanin's visit to New Caledonia will be closely followed and updates will be requested on the French finance ministry's commitment to assist in the situation, especially when it comes to search for a potential new investor that would be willing to take over from Glencore.
Frantic search for new investor
In the process of a search that has already started, it has been hinted that some interested buyers could include Chinese interests.
Another Asian entity, South Korea's POSCO, has been mentioned in the past few days.
Posco has been a partner of SMSP for many years, in a nickel refinery located in South Korea and that refines nickel from New Caledonia's Koniambo massif.
Karl Therby, Chairman of the SMSP (Société Minière du Sud Pacifique, the majority stakeholder in Koniambo, which is controlled by New Caledonia's Northern Province), told public broadcaster Nouvelle-Calédonie la 1ère they have also had contacts with "two potential international" buyers, but he declined to mention any name as yet.
He also stressed New Caledonia's woes were not isolated on the global scale, with "10,000 jobs scrapped in Australia's nickel industry over the past few months", with a backdrop of a sharp decline in nickel prices and despite a globally rising trend in demand, because of the worldwide transition to electric battery-powered vehicles (of which nickel is a crucial component).
France has also revealed this week it was approving a loan of some €140 million to Prony Resources, with an additional subsidy of another €40 to reduce the cost of energy, Southern province President Sonia Backès announced on Wednesday in Nouméa.
This would allow the Southern plant to maintain its activity at least until March 2025.
In the meantime, Prony Resources was said to be searching for a new shareholder to replace Trafigura (which currently owns 19 percent of the shares) as part of a wider overhaul of the company's financial montage.
Prony Resources has also sustained major losses of over US$100 million over the past year.
Karl Therby Chairman of SMSP. Photo: NC la 1ère
Controversial Constitutional amendment
The other sensitive issue Darmanin will have to face in New Caledonia is a draft Constitutional amendment that has now begun its legislative journey with a first step in the French Senate, where the proposed text is now scheduled to be debated in the Upper House on 26 February.
The Senate would then put the text to the vote on 2 April.
No date has yet been announced for the same process in the Lower House, the National Assembly.
On Tuesday this week, Darmanin was required to present the text to the Senate's Law Commission and explain why this involved postponing New Caledonia's provincial election date (originally scheduled to take place in May this year, but has now been postponed to 15 December at the latest).
The Constitutional amendment would "unfreeze" New Caledonia's list of eligible voters but still restrain that list to citizens who have been living in New Caledonia for an uninterrupted ten years.
Darmanin told the French Senate this week that this amendment would put an end to the "frozen" list which, as prescribed by the Nouméa Accord on a temporary basis, was only allowing citizens to vote in New Caledonia only if they had been residing there before 1998.
The amendment has been heavily criticised by some pro-independence parties, notably the Union Calédonienne (UC), who argue this would significantly open the door to non-indigenous Kanaks.
Darmanin said this week an estimated 25,000 voters would thus be allowed to join the revised electoral roll for provincial elections, including "Kanaks and non-Kanaks who were born there, but have not yet been allowed to vote under the current 'frozen' system".
"Today, there are (New) Caledonians who were born there from (New) Caledonian parents and still cannot vote", he told the Senate commission, justifying this amendment by the need to "restore a minimum of democratic life" to New Caledonia, "an acceptable compromise" between pro-independence and anti-independence parties, he said.
New Caledonia’s Congress in session on 17 January 2024. Photo: NC la 1ère
However, in another twist, even if this Constitutional amendment is eventually voted, it has been designed and formulated to only validly come into force if no political agreement on New Caledonia's is found before July 1st this year.
This, the French government said, was motivated by a will to promote conclusive and inclusive talks between all local parties (pro-France and pro-independence).
The controversial Constitutional amendment, after being tabled before the Senate and the National Assembly, also has to pass the vote before the Congress (a joint sitting of both Houses) by a majority of three fifths.
In a relatively polarised context, numerous attempts by Darmanin (who visited New Caledonia half a dozen times over the past twelve months) to bring all parties around the same table in order to all agree on a forward-looking agreement have so far failed.
During his trip to New Caledonia next week, Darmanin's delegation will also include French Justice Minister Eric Dupond-Moretti and newly appointed "delegate" minister for Overseas Marie Guévenoux.
Dupond-Moretti will be there to provide details regarding the construction of a new prison in the suburbs of the capital Nouméa.