Sherritt has no intention of changing guidance in face of potential Ambatovy disruption

TORONTO (miningweekly.com) – Diversified Canadian miner Sherritt International on Tuesday said it had no intention of changing the full-year guidance for its share of nickel production from the Ambatovy nickel/cobalt joint venture operation, in Madagascar, despite the possibility that a shipping tax dispute could halt production.

Shipments to and from Ambatovy had been stranded in an east-coast port since early this month, after government imposed a new shipment levy.

In a statement issued on Tuesday last week, Ambatovy said it was in danger of losing customers as a result of the shipping delays, and that it might be forced to shutter operations in less than a week as a result of not receiving consumables and spare parts.

Since February 9, Ambatovy cargo was subject to a new $100 Advanced Cargo Declaration (ACD) levy placed on every container shipped through the country’s ports. However, Sherritt, the operator and 40% stakeholder in the $8-billion Ambatovy mine, believed that under an agreement signed with government in December, the operation was exempt from the levy.

Sherritt on Tuesday said it was engaged in discussions with government officials and representatives, and the expectation remained that the matter would be resolved quickly.

Spokesperson Scott Tabachnick told Mining Weekly Online that Sherritt expected the government to uphold the terms of the Large Mining Investment Act (LGIM), which preceded the ACD levy, and that the matter would be resolved swiftly.

“The terms of the LGIM are clear, and we expect the government to uphold the laws and regulations of the country. We expect the matter to be resolved before [legal recourse] would become a consideration,” he said in an emailed statement.

Ambatovy currently employed about 8 000 people, including 3 000 direct employees and 5 000 contractor employees. Of these 8 000 people, 94% were Malagasy citizens.

Tabachnick also noted that Sherritt had no immediate plan to reduce its participation in Ambatovy. “We remain the operator and, while the current nickel market, liquidity preservation strategy and ownership structure don’t make sense for us to contribute to cash calls at this time, we are working closely with our partners and lenders to determine the best path forward,” he stated.