The collapse of Clive Palmer’s Queensland Nickel business has compounded fears of civil strife in New Caledonia should the French territory’s key mining customer go under completely.

The perilous position of the Townsville-based metals producer, which puts nearly all of New Caledonia’s export income from laterite nickel ore at risk, has heightened concerns among business operators and government officials that the fallout could spill over from major job and revenue losses into violent industrial clashes.

They expect the shutdown or mothballing of Yabulu refinery in Queensland would inflame a deeply divisive conflict in New Caledonia over the restriction of laterite purchasing rights to Palmer’s company and could create a significant political headache for the government.

It follows a warning by New Caledonian president Philippe Germain in a letter to Palmer last November that a shutdown of the Yabulu refinery would result in political unrest, violence and mine closures.

Reports of Queensland Nickel’s clouded future, after it went into voluntary administration with reported debts of around $70m on Monday, have made nightly television news bulletins in New Caledonia, where a quarter of all private sector employment relates to nickel exports.

A government agency source, who spoke on condition of anonymity, said there was widespread awareness that “if Yabulu collapses, there would be dire consequences for the country as a whole”.

“The impact would be tremendous. It would possibly trigger some industrial conflict and social discontent,” he said.

“And the government would be in a difficult situation.”

The refusal of Germain’s administration to grant export licences last year to independent local miners seeking to sell laterite to customers other than Queensland Nickel triggered a series of rolling protests and industrial blockades.

The dissent was led by the miners but opened up a bitter political contest between pro-free trade and pro-regulation camps that split even single political parties down the middle.

Queensland Nickel, whose administrators will examine ways for the company to trade out of its woes, still had its purchasing office in Noumea open on Tuesday.

Corinne Boufnoir, Queensland Nickel’s sole agent in New Caledonia, said the local government had “not yet” been in contact with the company about its position.

“The situation is normal. We’d like to continue the business in Noumea,” she said.

“I can tell you for the moment, the office is running in New Cal, so there is no indication of (change) for the business for the moment but I don’t know for the future, we’ll see.”

The government agency source said Queensland Nickel’s demise – should creditors vote to wind up the company for liquidation – risked drawing a reprise of protests against a government that had already weathered criticism for protecting the Australian company’s access to the market.

“That would compound their discomfort because the people who wanted to diversify the (exports) would say to the government, ‘See? See what you’ve done?’” he said.

“Within the economic operators, of course they are discussing about that and because you have articles in the paper and it made the TV news last night, people are aware it would be a problem.”

The reliance of New Caledonia on nickel exports – of which laterite ore makes up a portion – means the economy had been hit hard by several years of world nickel prices sitting well below the “break even” point.

Its resilience through the continued flow of public sector funding from the French government has been tempered by recent pressures on that government’s budget amid austerity moves in Europe.

The possible failure of Queensland Nickel therefore “comes at a bad time”, the government source said.

Attempts to reach a spokeswoman for Germain were not successful.