PARIS, April 10 (Reuters) - French mining group Eramet

said on Wednesday it had reached an agreement with the

French government to continue its subsidiary SLN's mining

operations in New Caledonia's Northern Province.

Under the agreement, Eramet could extend financial

guarantees granted to SLN, the mining group said, in a move that

would effectively avert the risk of a stoppage on its troubled

New Caledonian nickel subsidiary's operations.

SLN has been locked in a dispute with local authorities over

financial guarantees after the provincial government rejected a

short extension of the guarantees, which are required to cover

potential environmental restoration, Eramet earlier said in an

emailed statement.

SLN has always operated with lodged financial guarantees,

Eramet said, adding that the financial guarantees needed to be

provided to relevant Caledonian provinces to ensure the

restoration and rehabilitation of mining sites after their

definitive closure.

Eramet has provided such guarantees since 2020 for SLN given

that the nickel producer has been unable to do so itself, the

group said.

SLN, which processes its mined nickel at a smelter in

southern New Caledonia, is involved in wider discussions to

salvage the loss-making nickel industry in the South Pacific

territory.

The French government has been negotiating a rescue package

for the industry, involving hundreds of millions of euros in

loans and subsidies in return for a revamp of mining permits,

exports and energy infrastructure.

But an end-March deadline set by Paris to sign off the deal

was missed as New Caledonian parties continue to debate the

proposals amid wider political tensions divided between

pro-independence and loyalist parties.