Home / Mortgage Loans / Sherritt taking $1.6 billion writedown on Ambatovy mine amid brutal nickel market
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Sherritt taking $1.6 billion writedown on Ambatovy mine amid brutal nickel market

Sherritt owns 40 per cent of Ambatovy and expects to record an impairment of $1.6 billion (Canadian) in its year-end earnings.

The nickel market is so grim right now that three-quarters of global production is likely underwater on a cash margin basis, according to the chief executive of Sherritt International Corp.

“Nobody’s making a lot of money at this price level, by the time you factor in your sustaining capital and your financing costs,” David Pathe said in an interview.

Nickel prices briefly sank below US$3.70 a pound on Wednesday, the lowest since 2003. By comparison, prices reached a peak of more than US$23 in 2007. They were above US$9 as recently as mid-2014, but have been crushed due to weakening global demand and stubbornly high supply and inventories.

Low prices are taking a toll on Toronto-based Sherritt, which is ramping up production at the new Ambatovy mine in Madagascar at the worst possible time. Sherritt and its joint venture partners spent US$5.3 billion to get the project into production.

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