Japanese trading house Sumitomo Corp announced Thursday that it has started gradually resuming production at the Ambatovy nickel and cobalt project in Madagascar after resolving a recent pipeline issue. The company is also reevaluating future production targets for the site.
Sumitomo has faced ongoing challenges to stabilize output and improve profitability at Ambatovy since its launch in 2005.
“Our priority is to normalize production by addressing operational issues,” said CEO Shingo Ueno at a press conference.
He added that once production stabilizes, Sumitomo would “consider all options to determine the best path forward,” including possibly selling a stake in the project to bring in a new operator.
The Ambatovy project produced around 10,000 metric tons of nickel from April to September, about half of last year’s volume for the same period.
While an annual output forecast was not provided, the company had initially aimed for 35,000 tons by March 2024.
Sumitomo holds a 54.2% stake in Ambatovy, with the remaining shares owned by Korea Mine Rehabilitation and Mineral Resources.
In the fiscal year ending March 31, Sumitomo wrote down Ambatovy’s book value to zero, recording an impairment loss of 89 billion yen ($583.72 million).
When asked about potential further losses, Ueno noted that additional funding might be necessary to sustain operations, which could lead to another impairment if those funds become unrecoverable.
Sumitomo reported a net profit of 254 billion yen for the six months ending September, down 11% from the previous year, partly due to lower coal prices. ,
The company’s net profit forecast for the fiscal year ending March 2025 remains unchanged at 530 billion yen.
