Sumitomo Corp, a major Japanese trading house, announced on Thursday that it is gradually resuming production at the Ambatovy nickel and cobalt project in Madagascar following a pipeline issue last month. Here are the key details:
Production Resumption: The company is slowly restarting operations and is currently reviewing future output volumes to stabilize production and enhance profitability at the Ambatovy project, which began operations in 2005.
Operational Focus: Chief Executive Shingo Ueno emphasized that the immediate priority is to normalize production by addressing existing operational challenges. He noted that future options for the project include either retaining it or potentially selling a stake to another company, allowing them to take over operations.
Current Production Levels: From April to September, the Ambatovy project produced approximately 10,000 metric tons of nickel, which is only half of the output during the same period last year. While the company had previously anticipated annual nickel production of 35,000 tons for the fiscal year ending in March 2025, no updated forecast was provided.
Stake Ownership: Sumitomo holds a 54.2% stake in the project, which includes Ambatovy Minerals (the mining entity) and Dynatec Madagascar (the refining entity). The remaining shares are owned by Korea Mine Rehabilitation and Mineral Resources.
Financial Impact: For the fiscal year ending March 31, Sumitomo wrote down the book value of Ambatovy to zero, resulting in an impairment loss of 89 billion yen (approximately $583.72 million). Ueno indicated that further funding may be needed to sustain operations, which could lead to additional impairments if deemed unrecoverable.
Financial Performance: For the six months ending September, Sumitomo reported a net profit of 254 billion yen, an 11% decrease compared to the previous year, partly due to weak coal prices. The company has maintained its net profit forecast for the fiscal year at 530 billion yen.