Sherritt concludes Cuban nickel deal

Metal refiner Sherritt (TSE) and Cuban state-owned General Nickel Co. have entered into a 50-50 joint venture to mine, refine and market cobalt and nickel.

Cuba has granted the joint venture mining concessions containing more than 60 million tonnes of lateritic ore with high iron, nickel and cobalt values. Nickel grades in the Cuban deposits typically average 1.2% or 1.3%. These concessions are adequate to supply the Moa Bay processing plant for about 25 years. Further concessions covering more than 15,000 hectares of additional reserves have been granted and could extend the production life of the Moa plant to 50 years.

The joint venture includes three corporations jointly owned by General Nickel and Sherritt:

* Moa Nickel, which includes the mining and associated processing operations at Moa Bay;

* Cobalt Refinery Co., which comprises the metal-refining facilities at Fort Saskatchewan, Alta.; and

* International Cobalt Co., which will be responsible for the commercial activities of the enterprise, including sales and marketing. During the balance of the decade, about $150 million will be spent upgrading and expanding the Moa facilities. The new enterprise will have a total work force of about 2,000, 85% of whom will be based in Cuba and 15% in Fort Saskatchewan.

This joint venture is part of a longstanding business relationship between Sherritt and Cuba. In 1991, after facing a shortage of nickel feedstock in the previous year, the company procured a long-term supply contract with the Cuban government. Sherritt also holds an interest in oil exploration and production leases off the Cuban coast.