Sydney, April 26 (Reuters) - France is set to provide 300 million euros ($340 million) in loans to New Caledonia nickel producer Societe Le Nickel (SLN) as it struggles with weak prices for the metal, a French weekly newspaper reported.
Le Journal du Dimanche reported the move on Sunday, citing unidentified sources. It comes as French Prime Minister Manual Valls is due to visit the French territory in the Pacific later this week.
Nickel output accounts for about a fifth of New Caledonia’s economy. But a slump in prices is pressuring its three smelters, owned by Glencore, Vale and SLN, a unit of French conglomerate Eramet.
New Caledonia holds around a quarter of the world’s reserves of nickel, used in everything from stainless steel to batteries.
New Caledonia had until recently resisted selling ore directly to large consuming countries such as China, hoping to protect its local smelting industry.
But in a change in policy, the government earlier this month said SLN and another company were free to sell a combined amount of up to 700,000 tonnes of low-grade nickel ore, known as laterites, to Chinese buyers over a period of 12 to 18 months.
Eramet has already unveiled plans to sharply reduce production costs at SLN over the next two years to cope with a severe downturn in the global market as appetite for metals falters in top consumer China, with many producers operating at a loss.
The average cash cost of nickel production at SLN had fallen 10 percent compared with the 2015 average, Eramet said last week. ($1 = 0.8872 euros) (Reporting by Cecile LeFort and James Regan; Editing by Joseph Radford)