France will lend up to 200 million euros ($228 million) to support struggling New Caledonia nickel producer Societe Le Nickel (SLN), Prime Minister Manuel Valls said on Friday.
Valls, who is visiting the French territory, said the financing will be in place until 2018 with final terms still under discussion. The aid package comes at a time when nickel prices are hovering near 13-year lows. The mineral is crucial to New Caledonia as it accounts for about a fifth of its economy.
Earlier this year, the territory lost a key Australian customer which fell into insolvency. “The situation is serious,” said Valls. “SLN is facing an unprecedented crisis.”
SLN, a unit of French government-owned Eramet, has seen the average cash cost of nickel production drop 10 percent compared with the 2015 average. Valls also committed to support the replacement of an ageing electricity plant for SLN’s smelter.
The French territory has two other smelters, owned by Glencore, Vale. New Caledonia holds around a quarter of the world’s reserves of nickel, used in everything from stainless steel to batteries.
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