New Caledonia's president last month warned Australian MP and businessman, Clive Palmer, there could be unrest in the French territory if he shuts down his Townsville nickel smelter.
Last week the Queensland government refused to guarantee a loan to the Queensland Nickel smelter to help it continue operations.
The Australian newspaper reports that as well as the loss of up to 800 local jobs a shut down at the smelter could have regional implications.
It says New Caledonia President Philippe Germain warned Mr Palmer in a meeting in November that closing the refinery could spark political unrest, violence and possibly close mines in the territory.
Queensland Nickel has been a key market for New Caledonian nickel ore for years, along with Mr Palmer's Yabulu smelter in Townsville.
Earlier this year there were disruptive protests over the territory's government refusing to allow the sale of nickel to China in the wake of the Australian downturn.
A photo taken on August 19, 2015 in Noumea shows trucks blocking the Riviere Salee roundabout, as truck drivers blocked the different roundabouts leading to the city with 30-tonne trucks on the 15th day of protests against the government concerning the opening of a nickel ore export canal to China. Photo: AFP
