Sumitomo Metal Mining exits Solomon Islands nickel exploration project
TOKYO, Aug 8 (Reuters) – Japan's Sumitomo Metal Mining Co Ltd. said on Tuesday it will exit from a nickel exploration project in the Solomon Islands because of slumping nickel prices and the loss of a legal dispute over mining rights in the country.
Sumitomo Metal Mining, which began exploring in the Solomon Islands in 2005, has been caught up in a six-year legal battle with Australia's Axiom Mining, which ended this year with neither company being granted the rights over a nickel deposit in Isabel province, it said.
"As a result of our comprehensive review of business circumstances, the final judgment in the legal proceedings and other factors, we have concluded that it is difficult for us to implement the project," Sumitomo Metal said in a statement.
"We will pull out from all of the pending applications for mining leases," a company spokesman said, adding the withdrawal will be completed by the end of December.
The Japanese miner declined to disclose its exploration costs and the cost of the legal battle, but said the exit will have a minor impact on its earnings for the current financial year to March 2018.
"During the legal proceedings, nickel prices have plunged. But even if the market picks up, it would be difficult to conduct the project as the social and legal system has not been developed in the Solomon Islands," the spokesman said.
Sumitomo Metal has said it aims to increase its nickel output from its mine holdings to 150,000 tonnes a year in 2021 from the current 100,000 tonnes.
"We'll continue to seek new nickel assets through projects in the Philippines and Indonesia, among others," he said.
(Reporting by Yuka Obayashi; Editing by Richard Pullin and Christian Schmollinger)