查看配图Finished cobalt produced at Sherritt’s refinery in Fort Saskatchewan, Alberta. Credit: Business Wire.
Sherritt International (TSX: S) will temporarily lay off almost half its Canadian workforce to conserve cash while it seeks further United States approvals and financing to restart the Cuban operations that supply its Alberta refinery.
About 280 employees, representing 47% of Sherritt’s Canadian workforce, face layoffs expected to last about 90 days, although some could return sooner, the company said Wednesday. Metals refining at Fort Saskatchewan stopped June 22 after its feed inventory was depleted.
“This was a difficult decision, and we recognize the impact it will have on our employees and their families,” interim CEO Peter Hancock said.
Fuel deliveries
The layoffs underline how the refinery’s recovery depends on approvals and financing beyond Canada. A U.S. licence issued last month permits fuel deliveries to Moa in Cuba, but further authorization is needed to restart mining and processing and restore the flow of material to Alberta.
Sherritt suspended direct participation in its Cuban joint ventures on May 7 following expanded U.S. sanctions. Fort Saskatchewan is one of only three nickel refineries in North America, the company says.
The initial licence, received from the United States Treasury’s Office of Foreign Assets Control on Oct. 19, covers purchases and deliveries of fuel, fuel oil and sulphur, along with services provided by banks, vessel operators and insurers, Sherritt said in an Oct. 20 update. At that time, the first fuel shipment was expected to ship during the fourth quarter.
Multiple approvals
Sherritt has coordinated its applications with Gillon Capital, which is pursuing a potential controlling investment under a non-binding agreement. The fuel authorization is one of several approvals needed for that proposed transaction, the company said.
Financing remains another obstacle. Sherritt warned in October of a material uncertainty that could cast significant doubt on its ability to continue as a going concern, with payments to suppliers and other obligations dependent on additional financing and a broader recapitalization.
Ammonia fertilizer and sulphuric acid production and sales will continue during the layoffs, along with maintenance, environmental protection and safety work, Sherritt said.
Sherritt shares dropped 2.7% to 18¢ Thursday morning in Toronto, valuing the company at about $127 million (US$91 million). They’ve lost about 24% of their value since the start of the year.