In Its Annual Report
- The Canadian company is losing money, according to expert William Pitt, and he fears an intervention by Gaesa in mining management.
- Blackouts, fuel shortages, natural disasters and the loss of 2,100 workers affect the financial results.
By 14ymedio
HAVANA TIMES – The Canadian company Sherritt International has just corrected an omission by the Cuban authorities, who published a balance sheet in February of the country’s mining activities without disclosing the production data for 2024. Now, thanks to the annual report of the multinational, we know that the extraction of nickel and cobalt was, respectively, 30,331 and 2,206 tons.
Although the figures for 2024 were, on paper, better than those of the previous year – 28,672 tons of nickel and 2,876 tons of cobalt – the company has nothing to celebrate. This was explained to 14ymedio by businessman William Pitt, who knows the ins and outs of the mining giant, which he criticizes, along with its Cuban partner, for not presenting its data “in an adequate and precise way.”
To understand why Sherritt had a terrible year, says Pitt, we must take into account that the volume of metal extracted in Cuba is not necessarily processed in its entirety in the company’s plants in Canada or sold, since “the decrease in global demand” must be taken into account. In addition, profitability has been affected by “the cost of power cuts, hurricanes, sick leave and many other reasons.”
Despite the fact that the amounts extracted in 2024 were greater, Sherritt received 109.9 million dollars, 29% less than in 2023, said Pitt.
Aware of these figures, the Ministry of Energy and Mines admitted only to having gone through “an austerity process that slowed down its growth a little.” However, Sherritt’s report spares no negative comments in the description of its activities on the Island. Power failures, natural disasters, lack of fuel and basic supplies… the description shows that the word “austerity” falls short in the face of the outlook.
The Altman scale, an index to measure the “future” of the company this year, rated its expected performance at -2.85. “It’s like saying that Sherritt has great opportunities to go bankrupt in the next two years,” Pitt says.
The future is in Moa, according to the report. Sherritt has bet everything on the expansion of its plant in Moa, Holguin and calculates 25 more years of useful life for the deposits. By the end of 2025, it expects to have extracted between 31,000 and 33,000 tons of nickel and 3,300 of cobalt. The extracted metal is transported to Sherritt refineries in Alberta, Canada, and from there it is sold mainly to countries in Europe and Asia, the company explains.
In Moa, Sherritt aspires to produce mixed hydroxide precipitate, an indispensable compound for the electric car industry, especially in the United States. The constant clashes between the Administration of Donald Trump and the Government of Justin Trudeau, immersed in tariff tension, complicate those hopes.
“Nor will Tesla – the company run by Elon Musk, one of Trump’s favorites – use minerals from Cuba in its batteries,” says Pitt. “In addition, the batteries will not use as much cobalt and nickel as lithium.”
An agreement with the Cobalt Exchange allows Sherritt to exploit Cuban mines as compensation for a million-dollar debt, which in 2023 earned the company more than 2,000 tons. Cuba had to split its delivery in the fourth quarter of 2024: it paid $23.7 million in foreign currency and 223 tons in cobalt.
For once, Pitt says, Sherritt “played the game well”: despite the division, it managed to sell 50 of the tons delivered by Cuba and earned almost a million dollars.
“It is impossible to know why there was that fractionation because neither Sherritt nor Cuba has given information about the case; but the logical thing is to assume that it is because Cuba did not have enough foreign currency to make the full payment,” speculates the businessman. The decrease in the price of cobalt on the international market, on the other hand, has been remarkable since it exceeded $90,000 per ton in 2022. A ton is now quoted at just $24,300, a figure that had not decreased to that level since 2016.
One section of the report assures that the company has thoroughly investigated the accidents that caused the death of two of its workers in Moa in 2023. Since that time, it has implemented new security strategies. The result, they say, is that no incident was recorded last year.
However, Pitt says, the exodus of workers has been unstoppable. Sherritt has lost 2,100 workers in Cuba and has had to employ students “without any mining experience” in the workforce.
Two chapters discuss the risks of operating in Cuba: the exchange rate fluctuations of currencies and the growing inflation. In addition, Sherritt accuses the United States of intensifying the embargo and of having laid the foundations for the current economic crisis.
It admits, however, that the economic ups and downs of the Government, the obstacles to extract foreign currency from Cuba, the incidence of hurricanes and the blackouts – whose end they do not foresee – are factors that will affect the development of its activities in the country, as already happened in 2024. “These are changes that are beyond our control,” the report indicates.
There is another variable in the mining equation on the Island: the intervention of Cuba’s military conglomerate Gaesa, which Pitt sees as imminent. The fact that the Cuban regime is once again in the crosshairs of Washington’s sanctions, with Trump’s entry into the White House, has mainly harmed the hierarchy of the Armed Forces, who have lost the million-dollar business of remittances and are looking for new sources from which to “silently extract” money.
Operating in the shadows, Gaesa has placed sectors of the Cuban economy that were the responsibility of the civil government in military hands. This happened with the Cimex corporation and with Cupet (Union Cuba Petróleo), argues Pitt, in addition to Gaviota, the Almest real estate group, the International Financial Bank and many other agencies.
“Sugar and coffee are no longer important,” Pitt points out. In tobacco – which brought more than 400 million dollars into the state coffers (total sales were 827 million, but half went to the Spanish shareholder of Habanos S.A.) – other powerful partners intervene, who will not easily give up their share. Mining is what remains, concludes the businessman. “And not just any mining, only nickel and cobalt mining, because iron, copper and manganese have failed to establish efficient production.”
“An intervention by Gaesa will cost Sherritt a lot,” says Pitt, “because its shares are already at depressing levels, and they will lose all their attraction even for the most adventurous shareholders.” As for the report of the mining giant, enthusiastic even when describing a disaster, it is a mere “fairy tale” when there is an unquestionable truth: “Sherritt continues to lose money on the Island.”
Translated by Regina Anavy for Translating Cuba.
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