en.Wedoany.com Reported - Japan's Sumitomo Corp announced in May 2026 that it will fully exit the Ambatovy nickel and cobalt project in Madagascar, in which it has held a stake for over 20 years, transferring its 54.17% stake at a negative transaction value of $418 million to Ambatovy Mineral Resources Investment (AMRI), a consortium led by Essenwood Partners and South Africa's Zungu Investments, while providing financing to the buyer to facilitate the deal. The transaction is expected to close by the end of September 2026.
Sumitomo Corp, one of Japan's five major general trading companies and the core enterprise of the Sumitomo Group, has invested approximately $3 billion in capital since entering the Ambatovy project in 2005, with cumulative book losses of about $2.5 billion. Located about 80 kilometers east of Madagascar's capital Antananarivo, the project is a large-scale open-pit lateritic nickel-cobalt mine that uses high-pressure acid leaching (HPAL) technology to extract nickel and cobalt. In 2024, the project produced approximately 28,000 tons of nickel and about 2,500 tons of cobalt. Due to damage to the mine's infrastructure caused by a cyclone in February 2026, production has been suspended, with plans to resume by the end of June 2026. South Korea's Korea Mine Rehabilitation and Mineral Resources Corp (KOMIR) retains the remaining 45.83% stake in the project.
The uniqueness of this transaction lies in Sumitomo Corp not only transferring its stake at a negative value but also providing vendor financing to the buyer. This financing arrangement differs from standard mining M&A where the seller receives payment and transfers risk; its core is that the seller bears the financial cost of the exit for the buyer. Part of the financing has been designated for repairing the mine infrastructure damaged by the cyclone. While exiting equity risk, Sumitomo Corp ensures continued access to its downstream supply chain by retaining offtake rights for some nickel. The transaction is expected to result in a consolidated loss of approximately ¥70 billion and a non-consolidated loss of about ¥85 billion for Sumitomo Corp in the first quarter of fiscal 2027.
The acquiring entity, Ambatovy Mineral Resources Investment, is jointly led by Essenwood Partners and South Africa's Zungu Investments, with a key figure being Jason Kluk, former head of nickel trading at Glencore, who left Glencore at the end of 2024 and is now the controlling shareholder of Essenwood Partners and a director of Ambatovy Mineral Resources Investment. This acquisition brings together operational resources from the commodity trading and capital sectors, introducing a new management team for Ambatovy.
The Ambatovy project, with an annual production of approximately 28,000 tons of nickel and 2,500 tons of cobalt, holds a certain share in the global nickel market and battery material supply chain. This transaction provides a reference case for the financial sustainability of high-cost lateritic nickel projects globally amid the ongoing pressure from low-cost Indonesian supply and persistent nickel prices.
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