Sumitomo Corp Exits Madagascar Nickel Project, Shares Surge
Sumitomo Corp has announced the divestment of its 54.17% stake in the Ambatovy nickel project in Madagascar. This strategic withdrawal, amidst operational challenges, has resulted in a 17% increase in share value, reaching a record high.
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Sumitomo Corp's board has approved the transfer of its 54.17% stake in the Ambatovy nickel project to Ambatovy Mineral Resources Investment Holding Company, marking its exit from the operation it joined in 2005. Following the announcement, shares rose over 17% to 6,840 yen, reaching a record high.
The divestment incurs a negative impact of $418 million, with an anticipated loss of around 70 billion yen expected in the upcoming quarter. Despite this, tax effects may mitigate the overall profit impact, already included in the earnings forecast. Previous operational and market challenges prompted the strategic review leading to this decision.
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