What is causing the unrest in New Caledonia that is leading to a rise in nickel prices? – Firstpost

France declared a state of emergency in New Caledonia, a French Pacific territory, after riots erupted following changes to the French Constitution. The violence prompted a major operation by French authorities to regain control of important infrastructure. The unrest is threatening global nickel prices, as New Caledonia is a major exporter of the metal.

The territory holds 20 to 30 percent of the world’s nickel reserves, making it a crucial player in the global nickel market. The European Union has designated nickel as a critical raw material, underscoring its economic significance. The recent turmoil in New Caledonia has disrupted nickel supplies, causing prices to soar above $20,000 per tonne for the first time since September.

The spike in nickel prices comes as the International Energy Agency warns of potential supply shortages driven by growing demand for electric vehicles. The sudden surge in prices has ripple effects that could impact consumer goods and lead to broader inflationary pressures.

The political crisis in New Caledonia has further complicated matters for the struggling nickel industry, which is already grappling with competition from other countries and decreased profitability. The connection between the nickel industry and the territory’s independence debate adds another layer of complexity to the situation.

Despite the challenges facing the nickel industry in New Caledonia, the French government has vowed to support the sector with subsidies. The future of the territory’s nickel industry remains uncertain amidst the ongoing turmoil and global market fluctuations.