Sumitomo Announces Reduction in Nickel Production at Madagascar’s Ambatovy Project
Sumitomo, a Japanese trading firm, has revised its nickel production forecast at the Ambatovy project in Madagascar for the fiscal year April 2023 to March 2024. Initially projected to produce around 40,000 tonnes of nickel, the company has now adjusted its output expectations to just over 30,000 tonnes, citing operational issues that arose towards the end of last year as the primary reason for this reduction.
This cutback in production is anticipated to impact Ambatovy's total earnings significantly, with a projected decline of ¥17.4 billion yen ($118 million) for the 2023-24 fiscal period. This adjustment is attributed to the combination of weak nickel and cobalt prices alongside the revised lower nickel production figures.
Market indices reflect the broader industry trends, with Argus' class 2 nickel benchmark Indonesian Nickel Index (INI) for 10-14% nickel pig iron FOB Indonesia holding steady at $114.70/mtu as of February 2, unchanged from January 26, yet approximately $15/mtu below the levels observed in November 2023. Similarly, the INI for 37% mixed hydroxide precipitate (MHP) and 70% matte indices have experienced declines of about $15-20/mtu compared to November, despite minor recoveries in recent weeks.
The London Metal Exchange's benchmark price for class 1 nickel has also witnessed a significant downturn, dropping by around 20% over the past six months to approximately $16,000/t as of February 5, from highs above $20,000/t in early August.
