Cover Story
Is a Boom Coming Soon?
Hopes Pinned on Two New Nickel Plants in New Caledonia
At first glance the construction industry in New Caledonia’s capital, Noumea, appears to be booming. But behind the skyline of cranes, and the concrete frames of rising office and apartment blocks, the atmosphere is uneasy. Having experienced a decade of steady growth, the sector has taken a downturn and statistics show a drop in activity.
The construction industry employs 7000 people and accounts for 55 billion CFP annually. The public works sector generates 15 billion CFP and the rest comes from the building sector. Serge Darmizin, chairman of the public buildings and works union, believes the current negative trend will only be temporary. "We’re in a static situation but we’re working on measures to incite projects which will help stabilize the activity," he says. "It would be overreacting to say that the sector is undergoing a crisis. It will only be in crisis if this continues in the long term."
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To give the sector a boost, the union has advanced a proposal to the government requesting tax exemptions in several areas including hotel and public buildings and works projects. The union is also in the process of establishing a quality label to improve the image of construction firms and enable clients to choose knowingly. The label, Quali-NC, will be based on a recognized French label. It could give local firms more chance of winning contracts for European Union funded projects in the region. "It’s equivalent to a standard recognized by the EU which gives a point of reference," says Darmizin. "It will also open up better insurance rates for clients if insurance companies are assured of the structure’s quality."
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Jobs may be a little scarce but demand in the housing sector is high. The biggest housing contractor is the New Caledonian social housing firm, SIC. Secretary general Fabrice Richy says demand for housing currently exceeds supply. To meet the demand, SIC needs 1000 new homes a year. Currently the company supplies only half that figure. Richy says it is too risky from an economic point of view to be the only housing contractor in the social market and SIC needs a competitor.
Amidst the debate, local heritage protection group, Association Racine, aims to protect historic buildings that are being torn down to make way for modern structures. As well as New Caledonia’s cultural heritage, the association also campaigns to save its environment, especially mangroves, threatened by construction projects. It endorses economic growth through tourism ventures and by supporting the development of small enterprises, which specialize in building skills and practices used in the past.
Chairperson Isabelle Ohlen, says construction is jeopardizing the country’s architectural and environmental heritage. "We want these aspects to be included in economic development," she says.
Another of the association’s efforts is to encourage aesthetic values in town planning. It wants the Noumea city council in particular, to establish criteria for new buildings. "There are currently no regulations concerning architectural styles. We’re trying to encourage their establishment so there is a sense of harmony," says Ohlen.
Construction companies are setting their hopes on two big nickel processing plants planned within the next five years. After a successful trial period at its pilot plant in the south of New Caledonia, multinational mining corporation INCO announced its intention last December to proceed with a commercial plant. The impact on the local construction industry will be more significant in the north, however, if the Northern Province mining company, SMSP’s, plan to build a nickel smelter goes ahead. In association with Canadian company, Falconbridge, SMSP is currently studying the feasibility of the project. Stephane Camerlynck, communications manager for SMSP, says the company expects to make a decision on the smelter at the end of next year. If the project gets the thumbs up, construction will start in 2003. Unlike the INCO plant near Noumea, the SMSP plant would not be located near an existing center. "Although only about 50 percent of the construction on the actual plant will go to local building contractors, the spin-off will create considerable opportunities," says Camerlynck. "The population of the area will double which means the construction of schools, shops and other infrastructure will be necessary."
Darmizin may be concerned about the current state of affairs, but he is optimistic about the industry’s future. "I’m confident in the long term future of the sector because it’s linked to the well-being of New Caledonia. With the potential of big mining investments, the economy has never been this close to stability. If the mining projects prove successful, everything will follow."
