Key Minerals of the African Continent: Typhoon "Gazani" Forces the Ambatovy Nickel Mine in Madagascar to Shut Down
¬ After Hurricane Gazani hit Madagascar, Sumitomo Corporation suspended production at the Ambatovy Nickel and Cobalt Mine
¬ As of March 2025, the annual output of the Ambatovy Nickel Mine reached 28,000 tons, far below its designed capacity of 60,000 tons
¬ In the fiscal year 2024, Sumitomo Corporation wrote down the value of the Ambatovy asset to zero, recording an impairment loss of 89 billion yen (approximately 579 million U.S. dollars)
On February 18, Sumitomo Corporation announced the shutdown of its Ambatovy Nickel and Cobalt Mine. Previously, last week's Hurricane Gazani had struck the island, prompting the company to suspend operations, with authorities stating that the mine could not resume production immediately. This shutdown has exacerbated the operational difficulties faced by the country's largest mining asset.
The Ambatovy Nickel Mine was launched in 2009 with a total investment of 8 billion U.S. dollars, making it the largest investment project in Madagascar's history. Sumitomo Corporation and the South Korean state-owned mining company KOMIR jointly hold 54.2% of the shares in the mine. The project was designed to produce up to 60,000 tons of nickel and 5,300 tons of cobalt annually. However, in recent years, the actual output of the mine has been far below the design capacity.
In the fiscal year ending March 31, 2024, the Ambatovy Company produced only 31,000 tons of nickel due to a malfunction at the processing plant, far below the initial target of 40,000 tons. Although the company initiated a capacity expansion plan for the following year, an accident occurred in the ore conveying pipeline in October 2024, causing production to be forced to halt. Ultimately, the output for the 2024 fiscal year ending March 2025 dropped to 28,000 tons. In the current fiscal year, Sumitomo Corporation has already achieved a production of 24,000 tons in the first three quarters and is steadily advancing toward its annual target.
In a report dated February 4, 2026, Sumitomo Corporation stated: "Through continuous monitoring of the slurry conveying pipeline and strict control of key operating parameters, the company successfully maintained production stability, setting an annual production target of approximately 35,000 tons."
The company said it is currently assessing the damage caused by the typhoon and working on developing a post-disaster reconstruction plan. Although management hopes to resume operations as soon as possible, no specific timetable has been announced, leaving the operational outlook for the mine unclear over the next few months.
Financial Difficulties
The destruction caused by the typhoon is not the only challenge facing the Sumitomo Group's business in Madagascar. The island's long-term difficulties forced the group to write down the book value of the Ambatovy project to zero in the fiscal year 2024 (ending March 31). This move resulted in an impairment charge of 89 billion yen (approximately 579 million U.S. dollars). Analysts estimate that the project's cumulative losses are close to 2.7 billion U.S. dollars.
In this context, this Japanese company is reconsidering the possibility of exiting Madagascar. As operational difficulties continue to intensify, Sumitomo Corporation has proposed exit plans multiple times in recent months, including debt restructuring plans. However, the company has not yet clearly indicated whether the potential exit would be partial divestment or full withdrawal. The prolonged low prices of nickel have further complicated the market outlook - from a speculative peak of $100,000 per ton in 2022 to less than $20,000 per ton today, the price has significantly dropped.
The company stated in its financial report released at the beginning of this month: "As a shareholder of this project, we will continue to consolidate the business foundation while comprehensively considering the social value of the project, our own responsibilities, and the current market environment, continuously evaluating all feasible options to develop future policies that best serve the interests of all parties involved."
The 'social value' embodied by the Ambatovy project should not be underestimated. The project not only generates tax revenue and export earnings but also injects vitality into the local community by providing thousands of direct and indirect jobs. These social impact factors may complicate future negotiations at the mine site.
Source: ecofinagency
Original: toutiao.com/article/1857480655501323/
Statement: This article represents the views of the author."