Madagascar braces for windfall from nickel and cobalt exportsBy RIVONALA RAZAFISON in Antananarivo | Tuesday, October 9 2012 at 15:12
Madagascar is bracing for billion dollar revenue with its flagship Amabatovy mining project set to start exports of nickel and cobalt whose extraction is expected to last 30 years.
High-level government officials including President Andry Rajoelina Friday attended a function with diplomats and investors at the seaport of Toamasina to flag off the export era.
"Any potential investors are closely watching at the Ambatovy project and the continuous success of the company will enable us to be at all times an efficient ambassador to Madagascar in the eyes of the international community,” Mr Mark Plamondon, the project's CEO, said.
The project is 40 per cent owned by Sherritt International of Toronto, while Sumimoto and Korea Resources each hold a 27.5 per cent stake. SNC-Lavalin has five per cent.
The project will invest about $5.5 billion, the majority of which is funded by a consortium of 12 banks under the supervision of the World Bank.
Ambatovy expects to export an annual average of 60,000 tonnes of nickel and 5,600 tonnes of cobalt, all refined to 99.8 per cent, for 29 years.
"Ambatovy company will be exporting end products which will be suitable for the needs of the international market. That is a great realisation for Madagascar,” Mr Plamondon said.
"For transparency purposes, I’d like to announce that the company gave us $25 million that we will invest in social actions, infrastructure, health, education and agriculture,” President Rajoelina said.
The mining project has set aside a further $50 million as a guarantee in order to deal with any ecological issues related to the extraction, the Madagascar leader added.
Nickel and cobalt refining is a rare industrial engagement in sub-Saharan Africa.
The country will at first export nickel with the Ambatovy project seen to contribute $3.5 billion to the state beyond other direct benefits like creation of jobs for locals.
For its permanent needs, the company will be employing 6,000 workers with 3,500 employees recruited by its local partners.
Annual direct taxes and royalties will amount to $46.6 million over the next ten years coming years, official sources said.
Since the installation phase in 2006-2010, contracts and economic exchanges with local enterprises have reached $1.12 billion.
In 2011 alone the project spent nearly $205 million on local purchases.
The country's biggest-ever mining project will allow the government tackle poverty and improve citizens' daily life, but good governance and transparency will be key, observers say.
Ambatovy has promised to institute investment projects for the benefit of surrounding local communities in consultation with the government.
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