Business News

Sumitomo cuts Madagascar nickel production forecast due to system issues

[ad_1]

TOKYO: Japanese trading company Sumitomo Corp on Monday cut its nickel production estimates at its Ambatovy project in Madagascar due to system problems.

Sumitomo, which is struggling to stabilize production levels and improve the profitability of the Ambatovy project, now forecasts annual nickel production of around 30,000 tonnes for the year through March 31, down from its estimate of November of around 40,000 tonnes.

“In addition to some equipment malfunctions during the October-December quarter, another problem was discovered at the utility plant late last year,” CFO Reiji Morooka said during a press conference.

Additionally, due to lower-than-expected nickel prices, Sumitomo revised down its estimate of Ambatovy’s annual financial impact to a loss of 17.4 billion yen ($117 million) from its November balance forecast, Morooka said.

The company is not sure how soon the project problem will be resolved, another official said.

Nickel has long been considered a key material for electric vehicle batteries because it improves energy density so cars can run longer on a single charge.

But producers of the metal have been strained by Indonesia’s emergence as a supply-side powerhouse and, on the demand side, by innovations that move away from the use of nickel in batteries. Prices have fallen 40 percent over the past year, to around $16,000 per tonne.

Sumitomo reported a 13 percent drop in net profit between April and December, affected by falling prices for coal and base metals.

The company posted a profit of 404.1 billion yen for the nine months ended Dec. 31, up from 464.4 billion yen a year earlier.

The group maintained its annual profit forecast through the end of March of 500 billion yen, in line with the average estimate of 506 billion yen in a poll of nine analysts by LSEG.

($1 = 148.4200 yen)

[ad_2]

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button