New Caledonia's nickel industry has been found to be in a fragile position as large stocks are likely to prolong a recent sharp drop in the price of the metal.
According to the local newspaper Les Nouvelles caledoniennes, one of the territory's main producers discussed a recent study of the sector at an employers' meeting, which found that world-wide 75 percent of nickel producers could not cover their costs.
In New Caledonia's case, the plants of SLN, Vale and Koniambo have to contend with structural challenges related to a limited industrial base, high electricity and labour costs.
The quality of the ore at disposal, it said, failed to compensate for the disadvantage of being the producer with the highest costs.
The report said while demand for nickel to produce steel had slumped, more nickel was needed for mobile phones and in the aviation sector.