MELBOURNE, Jan 24 (Reuters) - New Caledonian nickel producer Prony Resources is facing an "alarming" situation amid a slump in metal prices as it waits for the possibility France will offer monetary support for the territory's nickel sector, a company spokesperson said.

Prony's struggles highlight the troubles of the French Pacific island territory's nickel industry, the fourth-biggest producer of nickel ore globally, as prices have plummeted 40% in the past year on surging Indonesian supply. After years of losses, France is trying to work out an agreement by the end of the month to bolster the producers through investments to help reduce costs.

Prony, which is backed by commodity trade house Trafigura, warned staff as early as August that it could run out of cash by year end, company spokeswoman Adelie Garaud Ballande said in an email on Tuesday.

"Unfortunately, at the end of 2023, our fears were confirmed, aggravated by a collapse in nickel prices on the markets and production below budget .... In the short term, the issue is to keep the cash flow going while waiting for support solutions," she said.

Companies in other high-cost nickel-producing regions have announced restructurings and writedowns as prices have dropped. Demand for nickel, a key component of advanced electric batteries, has surged on the global transition to electric vehicles and Prony inked a supply agreement with Tesla in 2021.

In November, French Economy Minister Bruno Le Maire said New Caledonia's three main producers, Eramet-backed SLN, Glencore's Koniambo Nickel (KNS) and Prony, would need 1.5 billion euros ($1.63 billion) in short-term financing.

The French government would contribute to other projects, including an overhaul of New Caledonia's energy system that has made local ore processing costly, but would not bail out the sector, he said.

Prony is 51%-owned by New Caledonia's territorial authorities and other local interests, while Trafigura has a 19% stake and the rest is held by a joint venture between Prony and investment firm Agio Global.

Prony's stakeholders bought the loss-making nickel operations in the French territory from Brazil's Vale in 2021. It set out to double production to 44,000 tonnes in 2024 from 2021 levels.

($1 = 0.9210 euros) (Reporting by Melanie Burton; Editing by Christian Schmollinger)