• Sumitomo Corporation suspended production at the Ambatovy nickel-cobalt mine after Cyclone Gezani hit Madagascar.
• Ambatovy delivered 28,000 tonnes of nickel in the year to March 2025, well below its designed capacity of 60,000 tonnes.
• Sumitomo wrote down its Ambatovy asset to zero in fiscal 2024, taking an 89 billion yen ($579 million) impairment.

Sumitomo Corporation said on February 18, that production stopped at its Ambatovy nickel and cobalt mine. The company suspended operations ahead of Cyclone Gezani, which struck the island last week, and authorities said the mine could not resume activities immediately. The disruption has intensified challenges at the country’s largest mining asset.

Launched in 2009 at a total cost of $8 billion, Ambatovy stands as the largest investment project in Madagascar’s history. Sumitomo holds a 54.2% stake in the mine alongside South Korean state-owned miner KOMIR. Engineers designed the project to produce up to 60,000 tonnes of nickel per year and 5,300 tonnes of cobalt. However, the mine has operated well below capacity in recent years.

During the financial year ended March 31, 2024, Ambatovy delivered 31,000 tonnes of nickel against an initial target of 40,000 tonnes due to malfunctions at the processing plant. Although the company launched a ramp-up for the following year, an incident on the pipeline transporting ore from the mine to the processing facility forced a suspension in October 2024. As a result, output for the 2024 financial year, closed in March 2025, fell to 28,000 tonnes. For the current financial year, Sumitomo moved on track to meet its annual target after delivering 24,000 tonnes over the first three quarters.

“The company maintained operational stability through continuous monitoring of the slurry pipeline and control of key operating conditions, with a production target set at around 35,000 tonnes,” Sumitomo said in a report dated February 4, 2026.

The company now said it is assessing damage caused by the cyclone while preparing measures to rebuild affected facilities. Although management aims to resume operations “as quickly as possible,” the company has not provided a timeline, leaving uncertainty over mine performance in the coming months.

Financial Difficulties

Cyclone-related damage does not represent the only concern for Sumitomo’s operations in Madagascar. Prolonged difficulties on the island pushed the group to reduce Ambatovy’s book value to zero for the financial year ended March 31, 2024. The move resulted in an impairment charge of 89 billion yen, or $579 million. Analysts estimate cumulative losses on the project at nearly $2.7 billion.

Against this backdrop, the Japanese company has revived the possibility of exiting Madagascar. Sumitomo has raised the option several times in recent months as difficulties mounted, including a debt restructuring plan. However, the company has not clarified whether a potential withdrawal would be partial or total. Prolonged weakness in nickel prices has further complicated the outlook, as prices fell from a speculative peak of $100,000 per tonne in 2022 to less than $20,000 per tonne today.

“While continuing to strengthen the foundations of the business, as a shareholder in this project, we will continue to examine all options in order to identify the best future policy for all stakeholders concerned, taking into account the social importance of this project, our responsibilities, and the current market environment,” the company said in its financial statement published earlier this month.

The reference to Ambatovy’s “social” importance carries weight. Beyond its contribution to tax revenue and exports, the project underpins local communities by providing thousands of direct and subcontracted jobs. These social stakes could complicate negotiations over the future of the mine.

This article was initially published in French by Emiliano Tossou

Adapted in English by Ange J.A de Berry Quenul