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The French government has agreed to grant a €40-million loan to SLN, the New Caledonian nickel producer controlled by mining group Eramet facing financial collapse, the Economy Ministry said on Monday.

The nickel producer warned in November of a “cash crisis” after drawing on the last tranche of 63-billion Pacific Francs ($567.57-million) in loans provided by Eramet and the French state in 2016 under a previous rescue package.

SLN has for years tried to improve profitability hit by social unrest and energy supply issues in the French Pacific territory. Eramet’s hopes of boosting SLN’s performance through increased exports of nickel ore were dashed last year by weather disruption to output and a surge in energy costs.

The government’s decision to provide a new loan came after an emergency cost savings plan launched by SLN failed to resolve its cash crisis, the economy ministry said.

As part of the short-term aid, Eramet would expand an existing overdraft facility with its subsidiary, the ministry said.

Eramet declined to comment further.

SLN’s minority shareholders, the STCPI vehicle representing New Caledonia’s provinces, and Nippon Steel refused to offer fresh financial support for SLN, the ministry added.

In return for its aid, the French government will consider creating loan guarantees against SLN’s assets, and has ordered an audit of New Caledonia’s nickel industry to explore restructuring options, the ministry said.

SLN is one of three nickel producers in New Caledonia, alongside Prony Resources and KNS, the latter part-owned by international commodities group Glencore.