The French government has agreed to provide a EUR40M (US$42.9M) loan to SLN, the New Caledonian nickel producer.

Société Le Nickel (SLN) operates mining and smelting operations in New Caledonia and is itself controlled by the mining group Eramet. SLN produces ferronickel at the Doniambo ferronickel smelter based on local mining of laterite ores and sells this to the stainless steel industry.

The intervention by the French government is an attempt to avert the financial collapse of the New Caledonian nickel producer after SLN warned in November of a “cash crisis.” Back in November, SLN drew down the last tranche of a US$567.6M loan provided by Eramet and the French government under a previous rescue package. Whilst providing additional aid, the French government is reportedly mulling loan guarantees against SLN's assets and has requested an audit of New Caledonian’s nickel industry to consider options for restructuring.

The SLN operation has long struggled with high costs associated with securing energy and periodic social unrest relating to the French overseas territory’s independence referenda. In a bid to boost profitability and revive the struggling operation, Eramet has pushed to export ore that is not suitable for processing at its operation. It received its first export authorisation from the New Caledonian government of 4Mtpy of ore in April 2019, which increased to 6Mtpy in early 2022. It now expects the ramp-up to be completed by 2024.

Following the loss of Indonesian material due to the export ban, Chinese nickel pig iron (NPI) producers have increasingly looked to source ore from New Caledonia to fill part of this void. Last year, New Caledonia accounted for 6.7% of China’s total nickel ore imports, up from 2.5% in 2018.