Sherritt International Corp. will not fund its 12% stake in the Ambatovy joint venture in Madagascar with Japan’s Sumitomo Corp. and South Korea’s Korea Resources Corp. (Kores) after Ambatovy made a cash call to boost its short-term liquidity. Sherritt announced it had become a defaulting shareholder.

First refusal to fund Sherritt’s 12% share in Ambatovy will now pass to Sumitomo and Kores. Sherritt has lost voting rights and influence on operations at a local level.

The Ambatovy mine, which produced 33,733 metric tons (mt) of refined nickel and 2,900 mt of refined cobalt in 2019, will reportedly continue to produce after Sherritt’s proposed exit.

Two years ago, Sherritt announced plans to reduce its stake in the Ambatovy joint venture from 40% to 12%, but has remained as the mine operator. At the time, Sherritt said the decision would allow it to eliminate $1.4 billion of debt.“Nickel and cobalt production at Ambatovy will not be [affected] by the transaction or pending timelines,” director of investor relations and communications, Joe Racanelli said, as reported by Fastmarkets.

Although Sherritt has increased its nickel and cobalt production guidance for 2020 via its 50/50 Moa JV in Cuba (with Cuba’s General Nickel Co), no production guidance was released for Ambatovy, which increased its nickel output by 2% year on year in 2019.

The Moa JV is expected to produce between 32,000-34,000 mt of refined nickel and 3,300-3,600 mt of refined cobalt in 2020. It produced 33,108 mt of nickel and 3,376 mt of cobalt in 2019.

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