Toronto-listed Sherritt International has announced an expansion strategy with its Cuban partners to capitalise on the growing demand for high-purity nickel and cobalt, driven by the accelerated adoption of electric vehicles (EVs).

The Moa joint venture (JV) will bolster finished nickel and cobalt production by between 15% and 20% a year from 34 876 t produced in 2020, extending the life-of-mine beyond 2040 through the conversion of mineral resources into reserves using an economic cut-off grade.

“Backed by a strengthened balance sheet and a favourable outlook for nickel and cobalt, we are moving forward with a multi-pronged strategy focused on generating incremental cash flow and transformative growth,” president and CEO Leon Binedell said on Wednesday.

“In addition to commercialising projects developed by Sherritt Technologies, our growth will centre on brownfield opportunities, where working in close collaboration with our Cuban partners, we plan to increase finished nickel and cobalt production and extend Moa’s mine life. Preliminary economics of the brownfield projects identified are quite encouraging and suggest a high rate of return on investment and low capital intensity,” he stated.

Expansion plans for the Moa JV consist of a multi-phased approach, and include completion of the new slurry preparation plant and other expansion circuits at Moa; installation of new equipment and upgrading existing equipment at the refinery in Fort Saskatchewan, Alberta; updating the 43-101 technical report published in June 2019 that reported more than 158-million tonnes of measured and indicated resources at 1% nickel and 0.13% cobalt at Moa to reflect production based on economic rather than a fixed, cut-off grade; and leveraging the expertise of Sherritt Technologies to optimise mine planning and performance.

Sherritt said that timelines, capital estimates and economics of the various projects were being finalised. An update on the Moa JV expansion would be announced by the end of the first quarter.

Meanwhile, the company reported that, in the third quarter, it had received $10-million in distributions from the Moa JV, representing its 50% share. Adjusted earnings before interest, taxes, depreciation and amortisation increased by 14% year-on-year to $17.6-million.

Sherritt’s share of finished nickel production at Moa was 2 908 t, down 22% from a year ago, while its share of cobalt production was 334 t, down 18% year-on-year. The firm explained that finished nickel and cobalt production were negatively impacted by a combination of factors, including the spread of Covid-19, timing of the full-facility shutdown at the refinery in Fort Saskatchewan, and unplanned maintenance activities that temporarily disrupted production activities.

All production has since resumed at normal levels, but Sherritt has adjusted its production guidance for 2021 to reflect the third-quarter developments. Nickel production will be between 31 000 t and 32 000 t (on a 100% basis) and the cobalt guidance remains unchanged at 3 300 t to 3 600 t.

Sales volumes for finished nickel and cobalt in the third quarter were down 16% and 26%, respectively, from last year, owing to lower output. Despite the decrease in sales, the Moa JV increased revenue by 11% to $108.9-million on the back of higher average realised nickel, cobalt and fertiliser prices.

In the third quarter, average-realised nickel, cobalt and fertiliser prices were up 29%, 62% and 50%, respectively, from last year.