How is the violent unrest in New Caledonia impacting global nickel prices?

JAKARTA, Indonesia (AP) — Global nickel prices have soared since deadly violence erupted in the French Pacific territory of New Caledonia last week.

The overseas territory, which has been under French rule for over 170 years, is a major global producer of the critical material that is needed to make electric vehicle batteries, solar panels, steel and other everyday items.

Here’s a closer look at the global importance of New Caledonia’s nickel industry and why social unrest in the territory has impacted prices.

WHY ARE THERE PROTESTS IN NEW CALEDONIA?

Riots erupted after French lawmakers approved changes to the French Constitution that would allow residents who have lived in New Caledonia for 10 years to vote in provincial elections.

Opponents fear the measure will benefit pro-France politicians in New Caledonia, where pro-independence Indigenous Kanaks have long pushed to be free of France.

Kanaks are seeking independence for the archipelago of 270,000 people, while many descendants of French and other non-Indigenous people who have settled on the island want to remain part of France.

On May 15, France declared a 12-day minimum state of emergency on the island. It rushed in 1,000 troops to reinforce security forces that lost control of some parts of the capital, Nouméa.

WHY DOES NEW CALEDONIA MATTER TO THE GLOBAL NICKEL MARKET?

New Caledonia holds between 20-30% of the world’s nickel reserves. It is a huge part of the archipelago’s economy, compromising up to 90% of its exports and employing around a quarter of its workforce.

The European Union has named nickel as a critical raw material, which means it is economically and strategically important for the European economy but is considered to have a high-risk associated with