COMMODITIES-CUBA: Nickel Industry in Full Recovery

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, May 4 2000 (IPS) - Cuba’s nickel industry is enjoying a sustained recovery after suffering a sharp decline in the early 1990s, and now turns healthy profits for the Canadian companies that are the principal investors in the sector here.

Canada’s Sherrit International, which holds dealings in nickel, petroleum and other sectors in Cuba, announced in mid-April that its profits reached 23.4 million dollars in this year’s first quarter.

These results are due to the strong demand for nickel and the rising prices of crude on the international market, says a Sherrit report.

The company’s oil production in Cuba hit 16,798 barrels per day in the first quarter, 43 percent higher than in the same period of 1999.

Sherrit International’s total profits on the island in all areas of business, including tourism, reached 75.3 million dollars in the period, compared to the 44.6 million it took in from January to March 1999, according to the report.

The Toronto-based company holds 50 percent of a joint venture with the Cuban government in nickel and cobalt, and owns the operations for refining the minerals in the Canadian province of Alberta.

Cuba’s current nickel production rate nears 68,000 tonnes per year, a total that is still less than expected, but still an important improvement over the 46,000 tonnes extracted back in 1989.

The 1989 yield set a record at the time, but four years later production fell to just 30,000 tonnes as Cuba’s usual markets and equipment suppliers in Eastern Europe disappeared with the collapse of the socialist bloc in the early 1990s.

Then, in 1995, the island produced 40,000 tonnes of the mineral, beginning an economic reactivation that has been spurred on by the application of new technologies and entrepreneurial strategies introduced by the Canadian investors.

Prices began to recover as well, reaching an average of 3.5 dollars per pound last year. In 1998, nickel brought just two dollars per pound, costing the island an estimated 70 million dollars in lost revenue.

The nickel industry is the island’s third major source of income, after tourism and sugar. Cuba has known nickel reserves of some 800 million tonnes, making it one of the world’s major nickel suppliers.

The output of the country’s three nickel processing plants, located in the eastern province of Holguín, is exported to some 30 countries.

According to the most recent official data available, the Pedro Sotto Alba processing plant, a joint venture of the Cuban government and Sherrit International operating under the name Moa Nickel S.A., is producing 27,500 tonnes of nickel and cobalt per year.

As part of the short and medium-term plans for the sector’s development, industry officials are trying to attract more foreign capital in order to expand production and even to build nickel refining plants on the island.

An agreement between Havana and the Australian Mining Corporation, which gives the foreign firm 65 percent of the shares, includes plans for nickel mining in Pinares de Mayarí Oeste, also in Holguín.

The accord is currently undergoing viability studies and project development that will attempt to cover the entire process – from mining the ore to building a refining plant.

Meanwhile, the creation of a mixed Cuban-South African firm, with 75 percent of the shares going to the foreign company, would set up the first nickel mining operations outside the Holguín area.

This new company would mine nickel in the San Felipe mesa, in northeastern Camaguey province, 615 km from the Cuban capital.

Local experts stress the importance of the refining process, saying that beyond the added profit value is the possibility of separating nickel from cobalt, the latter of which is strategically important and fetches high prices on the world market.

The goal is to increase the presence of Cuban cobalt on the international market, achieving 24 percent of the world cobalt trade, according to comments by the minister of Basic Industry, Marcos Portal.

Canada is the second largest investor on the island, after Spain. There are currently 374 mixed companies in Cuba, which are permitted under the foreign investment law decreed by the Fidel Castro government in an attempt to pull the country out of economic crisis.

Cuban authorities charge that the Helms-Burton Act, passed by the US Congress in 1996 to strengthen the trade embargo against Cuba, has discouraged or slowed foreign investment, though it did not stop the flow of capital to the island.

According to the government’s own sources, however, 57 percent of the existing joint ventures were finalised after the implementation of the US law, which establishes sanctions against companies that invest in US properties in Cuba that were confiscated by Havana in the 1960s.