The Nicos I.V. oil tanker, right, is seen alongside other tanker vessels in the port of Matanzas, Cuba, on Feb. 17.STRINGER/AFP/Getty Images
Canadian miner Sherritt International Corp. is suspending its operations in Cuba and three directors have stepped down after the U.S. expanded sanctions on the communist Caribbean island.
The Donald Trump administration has been ratcheting up pressure on Cuba for months in an effort to force regime change, including by severely restricting its oil imports.
On May 1, the U.S. brought further sanctions against Cuba in an executive order targeting companies and individuals operating in metals, mining and other sectors.
Toronto-based Sherritt has been heavily reliant on the Caribbean island for decades with a 50-per-cent stake in the Moa Joint Venture, which mines, processes and refines nickel and cobalt. It also has a sizable power division in Cuba with a one-third stake in Energas SA, the largest independent energy producer on the island.
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Sherritt said in a statement on Thursday it has suspended its joint venture operations in Cuba, effective immediately. While the company hasn’t been formally designated under the executive order, such a designation could occur at any time, it added.
“The mere issuance of the executive order itself creates conditions that materially alter the corporation’s ability to operate.”
Mr. Trump’s recent executive order gave the U.S. the power to impose sanctions on any foreign person operating in Cuba’s energy, defence, metals and mining, financial services and security sectors.
Sherritt said it is now taking steps to repatriate its expatriate employees in the country.
Brian Imrie, who was chairman of the board, and directors Richard Moat and Brett Richards have resigned from the company.
Shares in Sherritt fell by 42 per cent to close at $0.145 apiece on the Toronto Stock Exchange on Thursday.
After the U.S. captured Venezuela president Nicolás Maduro in January, Venezuelan oil shipments to Cuba were halted. That cut off the island from its main supplier. Mr. Trump subsequently signed an executive order imposing tariffs on any country that sold or provided oil to Cuba, further squeezing the country.
Sherritt had already warned in mid-February that its Moa operation was at risk of running out of fuel, saying that it was trying to find other suppliers.
The company also operates a nickel and cobalt refinery in Alberta, where it further processes metal mined in Cuba. Operations at the plant in Fort Saskatchewan are continuing, but the metal supply is expected to run out by mid-June.
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In an interview, National Bank Financial analyst Shane Nagle said the company has enough cash on its balance sheet to operate until the fall. After that, it is unclear whether it will be able to meet interest payments on its debt. A refinancing or a debt restructuring may be necessary, he said.
“There’s really just a lack of clarity as to what the pathway forward is,” he said.
Sherritt did not respond to a request for comment on Thursday.
The company’s market value peaked in the late 2000s, reaching almost $5-billion. But in recent years, its valuation has plummeted with its stock now trading for pennies. Even before the Trump administration pressured Cuba with new sanctions, the company had been struggling under a high debt load and dealing with low nickel prices.
Many U.S. sanctions date back to the early 1960s and were ratcheted up during the Cuban missile crisis.
Sherritt, which has been operating on the island since the 1990s, has tried to work around the sanctions by not dealing directly with the U.S., despite the close proximity, and by selling its metals to other markets. But relations between the company and the U.S. deteriorated significantly in 1996 after senior executives, including its then-CEO Ian Delaney and his family, were barred from entering the United States under the Helms-Burton Act.
Sherritt was originally incorporated in 1927. It formed the Moa Joint Venture with General Nickel Company S.A. of Cuba in 1994.
With a report from Jason Kirby