A strike at New Caledonia's biggest nickel company SLN is now in its second month and an end to the conflict is not in sight.
Nickel accounts for almost all of New Caledonia's exports, but the sector is struggling.
While SLN hopes to get out of its slump with a restructure, this is being resisted by two unions.
Walter Zweifel has been following the story and I asked him what the sticking point is.
SLN ship entering Noumea harbour Photo: RNZ Walter Zweifel
Walter Zweifel: Two unions refuse to accept changes to the work rosters, which hampers three of the four mines that supply nickel ore to the SLN smelter in Noumea. SLN wants its mine employees to work longer shifts but on fewer days. SLN says all up pay would rise by about 10 percent, more jobs would be created, and crucially for the business, its equipment would be used optimally. While some unions have agreed to the changes, the CSTNC and USTKE refuse to accept the new regime. One of the leaders at the mine in Thio, Elvis Lucas, was on local television saying certain aspects were not negotiable. According to him, working on a Sunday is not acceptable.
Dominic Godfrey: Have there been talks to resolve the dispute?
WZ: There have been meetings but the positions appear to be entrenched. The unions won't cede while SLN says this restructure is the only way to save the company. Complicating the situation is that the union umbrella organisations approved the restructure but the members at the mines reject it and are on strike.
DG: What has been the impact of this strike?
WZ: The nickel ore stocks at the smelter in Noumea have been run down and are now critically low. The furnaces cannot be turned off without incurring enormous damage to the smelter. So it's become a bit of a nervous time because it is also the cyclone season. There is a risk of disrupted supply and usually there are bigger reserves in Noumea to counter the effect of storms.
SLN smelter in Noumea New Caledonia Photo: RNZ Walter Zweifel
DG: How significant is SLN for New Caledonia?
WZ: It's the single most important company in New Caledonia's history, it's still the biggest private sector employer and it is at the heart of the territory's economy. Its smelter however is ageing and struggles to compete with rival producers in places like China, Indonesia and the Philippines. In the past six years it has run up losses of $US1 billion, but SLN can almost be categorised as a 'business too big to fail'. The French state and SLN's parent company Eramet advanced almost $US600 million three years ago to keep SLN going. However, that money is being chewed up by ongoing losses.
DG: What are the prospects for the sector?
WZ: The volatile nickel price keeps buffeting all of New Caledonia's producers. Profitability varies accordingly. New Caledonia has about a quarter of the world's known nickel reserves, but questions remain about how the mineral will be processed. There is a suggestion that SLN could try to sell ore directly to generate income but that is resisted by local politicians keen on keeping the resources. Vale, which also has a huge nickel plant in New Caledonia, had recently planned to mothball it but decided to keep it going as prices lifted. Nickel is forecast to be in high demand as more batteries are expected to be built for electric cars.
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