Japanese trading house Sumitomo Corp will divest its stake in the Ambatovy nickel project in Madagascar to Ambatovy Mineral Resources Investment, effectively paying $418 million to offload the asset, it said on Friday.
AMRI, headquartered in Jersey, is a mining-focused investment consortium led by Essenwood Partners and Zungu Investments Company.
Below are transaction details disclosed by Sumitomo Corp:
Sumitomo has been a shareholder in Ambatovy since 2005, holding a 54.17% stake in nickel mining company Ambatovy Minerals S.A. and refining company Dynatec Madagascar S.A., with Korea Mine Rehabilitation and Mineral Resources Corporation holding the remainder.
As a result of the transaction, Sumitomo expects to record a loss of around 70 billion yen ($447 million) in the April-June quarter, but the tax impact means the impact on full-year earnings will be immaterial.
Shingo Ueno, Sumitomo’s chief executive officer, told a briefing that the company has found a buyer with nickel expertise after concluding that a sale was the best option for the project.
It plans to close the transfer during the first half of the fiscal year ending March 2027 and has already incorporated the impact into the earnings forecast.
Ambatovy operations were pre-emptively suspended in February ahead of Cyclone Gezani and are expected to resume in the current quarter.
Sumitomo will retain certain nickel offtake rights.
Sumitomo has struggled to stabilise production and improve profitability at Ambatovy. Ueno had said previously that the company was considering all its options.
Sumitomo has invested a total of $3 billion in the project, and booked cumulative losses of 400 billion yen, according to a company spokesperson.
($1 = 156.5700 yen)
(Reporting by Yuka Obayashi; Writing by Katya Golubkova; Editing by Stephen Coates, Kirsten Donovan)
