• (Ecofin Agency) - Sumitomo to sell its 54.17% stake in Ambatovy, ending a two-decade involvement
• Repeated disruptions and weak nickel prices have weighed on output and finances
• New investor consortium set to take control as uncertainties remain over operations

Sumitomo Corporation plans to exit Madagascar’s Ambatovy nickel and cobalt project, ending more than two decades of involvement in one of the country’s largest foreign investments.

The Japanese group said on May 1 that it plans to sell its entire stake in the project, without disclosing the value of the transaction. The deal is expected to close by the end of Sumitomo’s fiscal year in March 2027.

Under the agreement, Ambatovy Mineral Resources Investment Holding (AMRI), a consortium led by Essenwood Partners Limited and Zungu Investments, will acquire Sumitomo’s 54.17% stake and become the majority shareholder. The remaining shares will stay with South Korea’s state-owned Korea Mine Rehabilitation and Mineral Resources Corporation (KOMIR).

The planned exit marks a turning point for a project long seen as a cornerstone of Madagascar’s mining sector. Launched in 2009 at an estimated cost of $8 billion, Ambatovy was designed to produce up to 60,000 tons of nickel and 5,300 tons of cobalt each year.

Sumitomo first joined the project in 2005 and became the main shareholder and operator in 2020 after Canada’s Sherritt International withdrew following years of losses and weak nickel prices. Six years later, Sumitomo now appears to be following a similar path.

The company has been reviewing its position for several months as operational challenges persist. The mine continues to operate below capacity, held back by recurring technical issues. Output reached 28,000 tons in fiscal 2024, down from 31,000 tons a year earlier, partly due to a pipeline incident that forced a temporary halt in operations.

Production is currently suspended after damage caused by Cyclone Gezani, which struck the island in February 2026. These disruptions have made it harder for Sumitomo to meet its operational and financial targets, especially as global nickel prices have remained under pressure since 2022 due to oversupply.

As of March 2024, the group had recorded cumulative losses of about $2.7 billion on the project and expects additional losses of around 70 billion yen, or roughly $447 million, for the current fiscal year.

Sumitomo said in its latest report that it had reviewed all strategic options in light of current conditions and determined that transferring its entire stake to Ambatovy Mineral Resources Investment Holding was the most appropriate solution.

The transition raises questions about the project’s future, particularly as control shifts to new investors. While Sumitomo expects operations to resume in the coming weeks, few details have been released about potential changes under AMRI’s leadership. The Japanese group said the consortium brings “recognized expertise,” noting that several of its members have managed similar nickel projects.

The timing of the exit comes as nickel prices show signs of recovery. According to Trading Economics, futures recently rose above $19,400 per ton, their highest level in nearly two years. It remains unclear how this rebound will influence strategic decisions around Ambatovy.

Sumitomo said it plans to retain rights to purchase nickel from the mine even after its exit. The project remains critical to Madagascar’s economy, contributing not only to government revenue but also to employment and local business activity. In 2024, Ambatovy employed 3,674 people, 89% of them Malagasy nationals, and reported $263.3 million in local procurement spending.

Aurel Sèdjro Houenou