Sumitomo finances Ambatovy stake sale to exit long-struggling project
2026-06-09 11:08:13 [Print]
Sumitomo Corp has provided financing to the buyers of its 54% stake in the Ambatovy nickel operation in Madagascar, smoothing the way for the Japanese trading house to finally exit the loss-making project, according to three sources familiar with the matter.
Having invested roughly $3 billion in Ambatovy over two decades and accumulated $2.5 billion in cumulative losses, Sumitomo said on May 1 that it would take a $418 million hit from the transaction.
One source explained that Sumitomo funded the deal while retaining certain nickel offtake rights because "it needed someone to take the problem off their hands." Part of the financing will go toward repairing cyclone damage to Ambatovy's facilities, the source added. Production has been suspended since February and is expected to resume by the end of June.
The 54% stake is being acquired by Jason Kluk, a former head of nickel trading at Glencore, and South Africa's Zungu Investments, subject to the deal closing by the end of September. South Korea's Korea Mine Rehabilitation and Mineral Resources Corporation retains the remaining 46% stake.
Turning Ambatovy into a profitable venture will be challenging, the source noted, pointing out that Sumitomo struggled for years to stabilize production and improve margins despite its considerable resources.
Rising sulphur prices-driven higher by the outbreak of the Iran war three months ago-have further squeezed margins by increasing input costs. In 2024, Ambatovy produced 28,000 metric tons of nickel and approximately 2,500 tons of cobalt.
Having invested roughly $3 billion in Ambatovy over two decades and accumulated $2.5 billion in cumulative losses, Sumitomo said on May 1 that it would take a $418 million hit from the transaction.
One source explained that Sumitomo funded the deal while retaining certain nickel offtake rights because "it needed someone to take the problem off their hands." Part of the financing will go toward repairing cyclone damage to Ambatovy's facilities, the source added. Production has been suspended since February and is expected to resume by the end of June.
The 54% stake is being acquired by Jason Kluk, a former head of nickel trading at Glencore, and South Africa's Zungu Investments, subject to the deal closing by the end of September. South Korea's Korea Mine Rehabilitation and Mineral Resources Corporation retains the remaining 46% stake.
Turning Ambatovy into a profitable venture will be challenging, the source noted, pointing out that Sumitomo struggled for years to stabilize production and improve margins despite its considerable resources.
Rising sulphur prices-driven higher by the outbreak of the Iran war three months ago-have further squeezed margins by increasing input costs. In 2024, Ambatovy produced 28,000 metric tons of nickel and approximately 2,500 tons of cobalt.
Cobalt Sulfate 20.5%min Delivered China
Unit:RMB/mt
China nickel cobalt manganese oxide producers' operating rate statistics by province by month
Unit: %
