New Caledonia coalition collapses over independence, mineral resources

A coalition government in New Caledonia, a French territory in the Pacific, collapsed on Tuesday after pro-independence politicians resigned, citing persistent economic issues and unrest over the sale of nickel assets.

People stand past a totem during the last meeting on 1 October, 2020 in Nouméa, of the Socialist Kanak National Liberation Front (FLNKS) campaign for "YES" to self-determination in New Caledonia's referendum. AFP - THEO ROUBY

The South Pacific archipelago, 1,200 km east of Australia, has been gripped by riots over the sale process of Brazilian mining giant Vale's local nickel business, with protesters saying a locally led offer had been unfairly overlooked.

New Caledonia, with a population of about 290,000, is also grappling with the question of decolonisation. The island chain enjoys a large degree of autonomy but depends heavily on France for matters such as defence and education.

L'UNI et l'UC-FLNKS démissionnent du gouvernement de la Nouvelle-Calédonie. En cause : la crise de confiance dans le dossier cession de l'usine du Sud, sur le budget primitif et l'absence de dialogue constructif avec l'Etat sur la prochaine consultation. https://t.co/OSkiXWYqV6 pic.twitter.com/TI5llJmNL4

— NC La 1ère (@ncla1ere) February 2, 2021

Referendums in 2018 and 2020 both rejected independence. A third referendum due by the end of next year should finally settle the issue, under the terms of a 1998 agreement with France.

Five pro-independence politicians, who are members of the pro-independent Kanak and Socialist National Liberation Front (FLNKS), in the 11-member executive have resigned.

The upheaval marks the end of President Thierry Santa’s multi-party government after 18 months in power. Congress must elect a new government within 15 days. 

The Goro nickel plant in southern New Caledonia, sold on December 9, 2020 by the Brazilian Vale. AFP - FRED PAYET

The Santa-led anti-independence coalition, L'avenir en confiance, said in a statement that separatists were causing a political crisis in the middle of a pandemic and amid economic and social tensions.

The separatists' resignation letter said a "crisis of confidence" had set in and that the government was not functioning properly at an important time when preparations were needed to be made for the next independence vote.

The letter also said the nickel asset sale favoured the interests of multinationals over locals. 

New Caledonia is the world's fourth-largest nickel producer, behind Indonesia, the Philippines and Russia. Demand for nickel, mainly used in making stainless steel, is expected to grow rapidly as a raw material in electric vehicle batteries.

Vale wants to sell its nickel business in New Caledonia to a consortium of buyers including Swiss commodities trader Trafigura. Indigenous Kanak leaders had supported an earlier bid designed to keep majority ownership under the control of the island territory.