The president of New Caledonia's Southern Province Sonia Backes says she expects the French government to come to the rescue of the SLN nickel company to stave off insolvency.
Backes, who is also a member of the French government, said the situation is quite simple.
She said if the government doesn't write out a cheque, SLN will close next year, which she said is not acceptable for anyone.
In 2016, SLN had already been given a $US600 million loan from its parent company Eramet and the French state, with the last instalment drawn down in September.
Backes said SLN's bankruptcy would not only mean the loss of thousands of jobs but also sink New Caledonia's social welfare system.
Two weeks ago, SLN initiated the first stage of a rescue and insolvency procedure amid fears the company will run out of funds.
SLN has said this ad hoc procedure will allow for discussions with all stakeholders to find lasting solutions to the company's structural problems.
The company said it finds itself in an unprecedented situation and within an unfavourable context as production targets have not been met and ore exports have declined.
However, SLN said it will do everything it can to overcome the crisis.
Unions picketed the SLN plant a week ago to express their fears that their jobs might be lost.
The CEO of Eramet Christel Bories was in New Caledonia last week and meeting workers, she said the situation was serious.
She took part in an SLN board meeting, but no announcements were made.
The French interior minister Gerald Darmanin, who is in New Caledonia this week, is expected to discuss the challenges in the nickel sector during his talks with local political leaders.
SLN is New Caledonia's largest company, employing about 2000 people directly and a further 8,000 indirectly.