Nickel, cobalt: Sumitomo reports Ambatovy impairment loss

Japanese global trading and business investment company Sumitomo Corporation will recognise an impairment loss of approximately ¥55Bn (US$513M) relating to the Ambatovy nickel and cobalt mining and refining operation in Madagascar in Q1 FY2020 (1 April 2020 to 30 June 2020). Sumitomo also stated that, in addition to this impairment loss on a consolidated basis, a valuation loss of subsidiary shares will also be booked on a non-consolidated basis.

Roskill View

This announcement represents a further blow to Sumitomo and the Ambatovy operation, which has remained suspended since 26 March as a result of the COVID-19 pandemic. The impact of COVID-19, alongside Sumitomo’s assessment of a decline in the mid- to long-term nickel price outlook, led to Sumitomo taking the decision to reassess its business plan.

Ambatovy started production of nickel briquettes in 2012 after suffering delays and cost over-runs. Although the operation has ramped up since then, its annual production has never approached design capacity of 60ktpy nickel. The highest annual output was 47.3kt nickel in 2015 and, subsequently, supply has remained well below this level.

Given the strong outlook for the EV battery market, Roskill forecasts rising demand for Class I nickel units suitable as battery-grade feedstocks. With operational adjustments, Ambatovy stands to benefit from this demand as an important source of high-purity nickel metal to the market.

Roskill’s Nickel: Outlook to 2029, 16th Edition report was published in April 2020 and outlines industry trends and forecasts for the next decade. The report forecasts nickel mine supply used in Class I and Class II production. Click here to download the brochure for the report, or to access further information.

Roskill’s NEW Cobalt: Outlook to 2030, 16th Edition report is scheduled for publication in September 2020. Click here for more information.

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This article was written by Jack Anderson. Please get in touch below if you wish to discuss further:

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