The global nickel industry is currently experiencing a period of instability, despite being considered a crucial metal for the ongoing digital and ecological transition. With New Caledonia being a significant player in the world’s nickel production, recent political unrest in the archipelago has further highlighted the challenges facing the market.
Emmanuel Hache, a Senior Research Fellow at IRIS specializing in energy forecasting and natural resource economics, sheds light on the current situation and world mining production of nickel. Despite nickel’s importance in low-carbon technologies like batteries, the market has been plagued by volatility in recent times.
The main reason for the depressed prices of nickel is the increase in global production, particularly from countries like Indonesia, the Philippines, and Russia. New Caledonia, which accounts for 5.6% of the world’s nickel production, is facing intense competition and economic challenges due to the dominance of other key players in the market.
The dependency of New Caledonia on nickel as a major source of revenue has also raised concerns about the risk of a resource curse, wherein the over-reliance on a single resource can lead to economic instability. As the world transitions towards a low-carbon future, the geopolitical dynamics of the nickel market are evolving, with countries forming alliances to control prices and resources.
The fluctuating prices of nickel, coupled with the uncertainties surrounding the global economic and geopolitical landscape, paint a complex picture for the future of the industry. As countries grapple with the challenges of the low-carbon transition, the need for sustainable resource management and diversification of economic activities becomes increasingly crucial to avoid potential pitfalls.
