The head of the Eramet nickel company, Patrick Buffet, says the nickel market is in a deep crisis and incurring massive losses to its New Caledonian subsidiary, SLN.
Mr Buffet says the price has plummeted to six US dollars a pound, which is well below the production cost of about 9 dollars.
He says the situation for the SLN plant in Noumea is serious as it is losing about 27 million US dollars a month.
To cope with the challenges, he says SLN will have to cut costs.
Mr Buffet says the crisis is due to the huge stocks being produced by China, which has been getting large quantities of ore from Indonesia.
Chinese producers have emerged as a major force, raising output within ten years from zero to 450,000 tonnes a year.
SLN expects to produce 52,000 tonnes this year.