Port Mercia is the capital of the British colony of the Rogation Sunday Islands1, in the Great Southern Pelagic Ocean.
At the beginning of Nation, Henry Fanshaw has just left to take up the post of Governor. He describes the place as a fairly recent acquisition, not nearly civilised enough for his mother, and sounding rather Somerset Maugham. Presumably, the British are there for the copra, a valuable source of oil in the nineteenth century.
(1) Another group discovered on one of the less popular dates of the liturgical calendar.