Sumitomo Corporation announced on the 2nd that it had incurred a loss of approximately 89 billion yen (approximately 900 billion won) from the Ambatovy nickel project in Madagascar, which it is currently pursuing.

The loss was recognized due to operational disruptions caused by malfunctions in nickel refining plant facilities, downward revisions in production forecasts due to reduced production, and a subsequent review of the business plan. Sumitomo Corporation said that the Ambatovy project would no longer be a burden on its profits and that it would keep all options open for future development directions, taking into account economic and social responsibilities.

In the first quarter of this fiscal year (January-March 2024), in addition to nickel business losses, there were a total of 150 billion yen in one-time losses due to the recognition of costs related to the Myanmar telecommunications business and impairment losses in the global agricultural products business.

Regarding its relationship with activist fund Elliott Management, which has been urging investment restructuring to enhance shareholder value, Sumitomo Corporation said it would continue to communicate with investors and shareholders and listen to their opinions.

Sumitomo Corporation, a leading Japanese general trading company, has been working with the Madagascar government on the Ambatovy project since 2005. The project, the world's largest of its kind, vertically integrates the entire process from mining development and smelter construction to nickel production, and entered full-scale production in 2012.

The project has contributed significantly to the Madagascar national economy, producing not only nickel but also byproducts such as cobalt and ammonia. It has made efforts in local employment creation, social infrastructure development, and environmental protection, but the recent poor operating performance has made restructuring unavoidable.

Sumitomo Corporation is expected to review the operating direction of the Ambatovy nickel project in consultation with the Madagascar government, local residents, investors, and other stakeholders. It faces the challenge of balancing economic benefits and social responsibilities arising from resource development.