London 13/01/2016 - The slump in nickel prices has forced Sumitomo to write down an estimated 77 billion yen ($654 million) against its investment in the Ambatovy laterite nickel mine in Madagascar.
The Japanese company attreibuted the impairment loss to the slump in nickel prices during the October-December 2015 period when the metal hit its cheapest since 2003 at $8,145 per tonne on the LME, basis three months.
Unfortunately, 2016 has seen little improvement - the metal hit fresh 2003 lows this week of $8,120. It was last at $8,245.
Sumitomo has a 32.5-percent share in the mine, with Sherritt International and Korea Resources holding the remainder. The project was set up in 2005 to integrate all processes from mining to refining.
"As a result of revisions to medium- and long-term price forecasts due to the current decline in nickel prices, project companies have determined that it will be difficult to recover the entire carrying value of their fixed assets," it said in a statement on Wednesday.
Following a meeting, the company will revise its consolidated earnings forecasts for the fiscal year ending March 2016 to "undetermined", it said. Previously, the company had guided for net income of 230 billion yen.
(Editing by Mark Shaw)