NEW YORK Sherritt International Corp. blamed poorer results last year on lower nickel prices caused by global production exceeding demand.
The Toronto-based company posted 2012 net income of Canadian $33.2 million ($32.45 million), down 83.2 percent from C$197.3 million the previous year, on revenue that fell 6.7 percent to C$1.84 billion ($1.8 billion).
Sherritt fell into the red in the fourth quarter, posting a net loss of C$17.3 million ($16.91 million) in contrast to net income of C$28.1 million in the same period a year earlier, on a 12.8-percent decline in revenue to C$467.9 million ($457.38 million).
The reduction in net earnings was attributable to lower revenue (resulting from lower nickel and cobalt reference pricing and lower export thermal coal sales volumes), higher operating costs in metals and coal (business divisions), higher depreciation in coal resulting from a change in environmental rehabilitation obligations, and an increase in the net finance expense resulting from the redemption premium, the company said.
Sherritt said that last years average nickel price was $2.41 per pound lower than in 2011 and fourth-quarter nickel prices were 60 cents per pound lower than a year earlier as global production continued to outpace demand.
In more positive news, finished nickel production climbed to 39,958 tonnes in 2012, up 16 percent from 2011, with fourth-quarter output of 12,281 tonnes 34 percent higher than a year earlier.
The company expects finished nickel production to total approximately 78,000 tonnes in 2013 as its joint-venture Ambatovy project in Madagascar continues its ramp-up and achieves commercial production during the year.
Sherritt president and chief executive officer David Pathe said in a statement that 2012 was a transformational year for Sherritt, marked by Ambatovys successful transition from a project to an operation.
However, the addition of finished metal production from Ambatovy during 2012 was partially offset by lower finished metal production at its joint-venture Moa project in Cuba, due mainly to reduced mining equipment availability and lower availability of third-party nickel feed, the company said.