US sanctions shut Canada’s only cobalt refinery

Sherritt International (TSX: S) has begun shutting down its Fort Saskatchewan refinery after expanded U.S. sanctions on Cuba halted the feedstock supply needed to keep the Alberta plant running.

The Toronto-based nickel and cobalt producer said the transition follows previous guidance that refinery operations would continue only until mid-June based on available inventory. The company has implemented shutdown procedures and will retain the personnel and resources required to keep the facility in a safe and secure state while operations remain suspended and it conducts maintenance. 

Sherritt mined nickel and cobalt at its Moa joint venture in eastern Cuba and processed the material at its refinery near Edmonton.

The shutdown marks the latest fallout from Washington’s tougher stance on Cuba and highlights the vulnerability of supply chains that depend on the island’s mining sector. 

Since the Cuba sanctions began to bite in May, shares in Sherritt International have collapsed to 12¢ apiece in Toronto, valuing the company at $84.5 million. 

Impact

The refinery will remain idle until mining and processing activities at Moa resume and the feed pipeline is rebuilt. Sherritt said it cannot provide guidance on when that may occur and continues to suspend its direct participation in the Cuban joint venture.

The company continues to produce fertilizers and sulphuric acid for resale, providing a source of revenue while its core nickel and cobalt operations remain constrained.

Sherritt has faced mounting operational and financial challenges since the U.S. expanded sanctions against Cuba in May. The measures have disrupted the company’s primary source of refinery feed and forced it to focus on preserving cash while preparing for an eventual restart.