Sumitomo Plans Sale of 54% Stake in Ambatovy Nickel Mine Following Cyclone Damage and Production Challenges
Sumitomo Corporation plans to sell its 54% stake in the Ambatovy nickel project in Madagascar after completing a strategic review of market conditions and operational performance.
The Japanese trading house said it intends to divest its majority interest during the first half of its fiscal year ending March 2027.
Ambatovy is one of the world’s largest integrated nickel mining and refining operations but has faced persistent operational challenges.
Operational disruptions and cyclone impact
The project has experienced a series of setbacks, including damage to critical infrastructure such as a slurry pipeline and ongoing processing issues.
Operations were suspended shortly before Cyclone Gezani struck eastern Madagascar in February, causing further disruption.
Sumitomo said the project has not yet resumed operations since the cyclone, adding to the pressure on the asset’s performance.
Financial impact of divestment
The company expects to record a charge of approximately ¥70 billion (about $445 million) related to the sale. However, this impact will be partially offset by lower income tax expenses.
Strategic shift after prolonged challenges
Sumitomo had previously indicated it would consider divesting its stake after attempting operational improvements at the site.
The planned exit reflects a broader reassessment of the project following repeated disruptions and difficult market conditions.
The move underscores the challenges facing large-scale mining projects in volatile environments, particularly in the nickel sector, where operational risks and external shocks can significantly affect performance.
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