Sumitomo to exit Ambatovy Nickel Project in Madagascar

Japanese trading house Sumitomo Corp announced on Friday that it will divest its stake in the Ambatovy nickel project in Madagascar to Ambatovy Mineral Resources Investment (AMRI), a move that will see the company pay $418 million to exit the asset.

AMRI, headquartered in Jersey, is a mining-focused investment consortium led by Essenwood Partners and Zungu Investments Company.

Sumitomo has been a shareholder in Ambatovy since 2005, holding a 54.17% stake in both Ambatovy Minerals SA, which operates the nickel mining operations, and Dynatec Madagascar SA, the refining company. The remaining stake is held by Korea Mine Rehabilitation and Mineral Resources Corporation.

Operations at Ambatovy were preemptively suspended in February ahead of Cyclone Gezani and are expected to resume later this quarter.

Under the terms of the exit, Sumitomo will retain certain nickel offtake rights.

The Japanese trading house has long struggled to stabilize production and improve profitability at Ambatovy. Previously, company officials indicated that Sumitomo was considering all available options for the asset.

According to a company spokesperson, Sumitomo has invested a total of $3 billion in the project and booked cumulative losses of 400 billion yen.