Ambatovy, Madagascar’s nickel and cobalt mining operation, has halted a pipeline transporting ore from its eastern mine to a processing and refining facility due to damage, as reported by its major shareholder, Sumitomo Corp.
While Ambatovy assesses the operational impact and recovery timeline, traders suggest that a prolonged shutdown exceeding two months could constrict supplies in the cobalt market.
According to Sumitomo’s statement on Monday, the slurry pipeline was damaged on September 25, and the cause is currently under investigation. Fortunately, there were no reported injuries.
Since its launch in 2005, the Japanese trading company has faced challenges in stabilizing production and enhancing profitability at the Ambatovy project. In the April-June quarter, production dropped to approximately 8,000 metric tons of nickel, down from around 10,000 tons during the same period last year. Sumitomo projects an annual output of 35,000 tons for the fiscal year ending March 31.
The company did not disclose cobalt production figures, but according to Darton Commodities, Ambatovy produced 3,390 tons of cobalt last year.
Sumitomo holds a 54.2% stake in the project, which comprises Ambatovy Minerals (a mining entity) and Dynatec Madagascar (a refining company). The remaining shares are owned by Korea Mine Rehabilitation and Mineral Resources.
In August, the Ambatovy nickel project companies submitted a debt restructuring plan to a London court. Sumitomo Corp clarified that this filing aims to secure stable and efficient project operations rather than indicating a liquidation process.
