PARIS, July 12 (Reuters) - Mining group Eramet said that the board of its nickel subsidiary SLN in New Caledonia has approved a 200 million euro ($222.28 million) loan from the French government, aimed at helping the loss-making business survive a severe market downturn.
The loan was proposed by Prime Minister Manuel Valls during a visit to the French Pacific territory in late April, but initial terms were blocked by representatives of New Caledonia’s northern province.
The new version of the deal will involve France lending directly to SLN, rather than to the STCPI, a vehicle representing the New Caledonian provinces that controls 34 percent of SLN.
The eight-year loan will bear interest at a minimum rate of 4 percent, supplemented by progressive remuneration indexed to the EBITDA (earnings before interest, tax, depreciation and amortisation) margin, Eramet said in a statement on Tuesday.
The loan is part of a two-year rescue plan for SLN that also includes a target to reduce production costs by 25 percent.
Eramet, which owns 56 percent of SLN, has provided 190 million euros of extra financing since December to preserve the liquidity of the nickel firm, which lost around 20 million euros a month last year due to a slump in prices for the mineral, which is used in stainless steel.
Benchmark nickel prices on the London Metal Exchange touched 13-year lows in February due to weak industrial demand and persistent oversupply. But prices have since partly recovered, helped by the prospect of mine closures in the Philippines. ($1 = 0.8998 euros) (Reporting by Gus Trompiz; Editing by Bate Felix and Louise Heavens)
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