Last October, attention was focused on the French South Pacific territory of New Caledonia in an independence referendum. The result was narrowly rejected independence from France with 53.26% of votes. Japanese resource officials were relieved. New Caledonia is a major producer of nickel ore. If it became independent of France, there were fears that China's economical support would be strengthened and nickel resources would be enclosed by China.
The main usage of nickel is the raw material of stainless steel. However, it is also used as a material for electric vehicles (EV) batteries and its importance as a "strategic resource" is increasing. Production areas are unevenly located around the world, and Japan relies on imports from two countries: New Caledonia and the Philippines. Due in part to the low quality of Philippine’s ore, less than 80% of imports in 2020 were procured from New Caledonia.
Batteries affect the EV's performance as to how long it can drive on a single charge. The capacity of the battery is decided by how high the percentage of nickel can be contained in the cathode material for the lithium ion battery. Tesla, U.S. EV manufacturer with a market capitalization of about 80 trillion yen and three times that of Toyota Motor Corp, produced 499,550 units last year. With less than 10% of Toyota's global production volume, battery procurement is essential for future production’s expansion.
With the global decarbonization trend, the spread of EV is expected to expand. Japanese Prime Minister Yoshihide Suga also announced a policy of reducing Green House Gas (GHG) emissions to virtually zero by 2050. According to the Green Growth Strategy formulated by the government in December 2020, the government announced that all passenger car sales will be electric vehicles by the mid-2030’s at the latest, and that it will strongly promote the introduction of EV.
In order to support the spread of EV, it is important to ensure the stability of nickel. Japan used to source about half of its nickel ore from Indonesia. However, the country's ban on nickel ore exports in 2014 in order to foster its own industries led to a surge in prices. In 2017, it conditionally allowed some exports to resume, but it has embargoed since 2020.
The New Caledonia people's vote was conducted under the 1998 Noumea Accord, which gradually expanded autonomy if its intention to become independent was confirmed. Indigenous Kanak want independence, growing frustrated by the disparity between French immigrants and their descendants, Europeans. In the first ballot in 2018, 56.4% voted “Non”. A third referendum could be held by 2022.
Meanwhile, in September 2019, the Solomon Islands and Kiribati cut official ties with Taiwan and have diplomatic relations with China. After then, they also signed a Memorandum of Understanding (MOU) for cooperation on “the Belt and Road” Initiative, which develops cooperation in areas such as trade and investment and infrastructure construction. China is strengthening its expansion to replace the United States in trying to put Pacific Island nations under its power. Based on the "Free and Open Indo-Pacific Strategy" advocated by former Japanese Prime Minister Shinzo Abe, Japan will restrain China's moves with a security framework “Quad”, that includes the United States, Australia, and India.
Resources affect the fate of nations. The main cause of Japan's plunge into the Pacific War is U.S. embargo on oil exports to Japan. In World War II, the U.S. bomber B29 attacked from an altitude of 10,000 meters, while Japan’s fighters were overwhelmingly disadvantaged because it could not fly to that altitude. This is because the lack of nickel resources has made it unable to make nickel alloys that can withstand high temperatures, and the turbocharger mounted on the B-29 could not be developed.
The movement of, what we call, “resource nationalism”, such as embargoes, is spreading around the world. In order to win fierce international competition on the stage of the environment toward the realization of decarbonization, it is necessary to build a system that can secure nickel resources stably.
Yoh Sawada (Journalist)
