20 Oct 2008

New Caledonia hit by slump in nickel prices

5:56 am on 20 October 2008

The global economic crisis is set to have a huge effect on New Caledonia's nickel industry.

Its only nickel producer, SLN, contributed to 15 percent of the territory's tax revenue last year.

A multi-billion US dollar project, Goro Nickel, is set to start production early next year and there's another project planned in the north, at Koniambo.

Claudine Wery reports.

"The executive manager of La Society de Nickel, Pierre Alla, says they are in a red zone and have reached a price that hardly covers the cost of production. Nickel is the main source of economic development in New Caledonia. On Thursday, the rate of nickel was US$11, 450 per tonne, in January the average rate was $27, 000 per tonne. And it reached almost $50,000 in May 2007. Mr Alla says no-one had anicipated such a fall and he can't say what's going to happen."