SMM Estimates Max 10B Yen Damage on Taganito Ni Project

Sumitomo Metal Mining (SMM) estimates total damage on Taganito nickel project in the Philippines may reach approximately 10 billion yen at maximum, explained president of SMM Mr. Nobumasa Kemori, at a press conference in Tokyo on November 15. Taganito mine was attacked by an armed group in early October. The plant construction has suspended. Mr. Kemori said construction works would delay by six months while SMM doesn’t change the operation commencement scheduled in 2013.

SMM plans to construct a plant to process low-grade laterite nickel ore near Taganito nickel mine in Mindanao, the Philippines and to launch commercial production of nickel-cobalt mixed sulfide, an intermediate material for nickel smelting, in 2013.

The construction works have progressed to about 30% of the completion until the end of September as scheduled. However, an armed group attacked Taganito mine and the plant under construction on October 3. There was no human damage while cranes, trucks, boilers and power generators were damaged on the site.

Direct damage on facilities is estimated at less than 10 billion yen but, Mr. Kemori revealed, SMM assumes total damage might reach approximately 10 billion yen including additional cost for interruption of construction works or strengthening safety measures. SMM tries to restart the construction works within this year.

Mr. Kemori also showed a vision to accelerate optimization of Materials business unit, mainly involving electronic materials. SMM considers withdrawal or property sales of current low-profit businesses while the firm tries to focuse management resources on growing businesses including lithium ion battery materials or sapphire substrates.

SMM had forecasted 9 billion yen of yearly operating profit for Material business in fiscal 2011 ending in March 2012 while the firm reviewed the profit forecast downward to 1 billion yen. Mid-term target was set at 15 billion yen for fiscal 2012 but the achievement seems to be difficult at present. Material business unit’s yearly recurring loss is currently estimated at 2 billion yen for fiscal 2011.