U.S. Cuba signals ‘confusing, conflicting’: Sherritt CEO
MINER NOT EXPECTING CHANGES ANY TIME SOON
TORONTO• David Pa the knows what it’s like to be banned from the United States.
The chief executive of Toronto-based Sherritt International Corp. received a letter from the U.S. Department of Homeland Security three years ago saying he was no longer welcome in the U.S. because of the nickel miner’s business dealings in Cuba.
“There’s frankly a certain random element to it,” said Pathe, who has been with the company for 10 years and CEO for five.
“I tell people that and they’re flabbergasted — a lot of Americans I tell this to can’t believe it.”
Sherritt is a joint owner, along with the Cuban government, of the Moa nickel and cobalt mining, processing and refining operations in eastern Cuba, and also produces about two- thirds of Cuban oil. The company has been operating under the status quo — including crippling U.S. economic embar go.
Pathe, who heads up the largest foreign company in Cuba, isn’t holding his breath for a change in policy toward the isolated communist island under the new U.S. president any time soon. Nor is he planning any visits with old friends in New York City.
The Trump administration announced Friday a “full review” of U.S. policy toward Cuba, leaving many scratching their heads about potential sanctions or renewed travel bans.
Like the anxious Cuban people, Pathe, 46, dreams of a more normalized state of affairs between Cuba and the U. S — which could see the company be able to export oil and metal to the U. S. and also realize cost-savings from importing American made machinery into Cuba, as it does to its Ambatovy mine in Madagascar.
“Cuba getting reintegrated into the international financial markets would be positive for us and enable us to access the U. S. capital markets in ways we can’t today,” Pathe said.
So far those signals have been “confusing and conflicting,” he added.
Trump has been reportedly interested in opening hotels in Cuba but also said during his campaign that he planned to get tough on Cuba, including a potential shuttering of the newly reopened U.S. Embassy in Havana.
Under president Barack Obama, relations with Cuba thawed, with more U. S. travellers visiting the country. Pathe also noticed last year more American companies present to “kick the tires” in the hopes of improved trade flows between the two countries.
Pathe maintains his waitand-see approach, given that he doesn’t believe Trump is ideological about relations with Cuba the way Republican nominee rivals Marco Rubio or Ted Cruz might be, Pathe said in an interview with the Financial Post.
“I don’t think he’s spent a great deal of time thinking about Cuba,” he said. “I frankly don’t think Cuba is going to be very high on his agenda for the next few years.”
Meanwhile, the Sherritt CEO has other challenges to face, including a depressed share price, a massive debt load related to development of its 40 per cent owned, US$ 5.3 billion Ambatovy mine and a weak market for nickel, its primary product. However, as a result of an agreement with bondholders, the company holds and effective 12 per cent interest in the mine. It has stopped funding its cash contributions to the mine as a result.
Pathe said the company is seeing a slight rebound in nickel prices, used to make stainless steel and other manufactured goods as the underlying fundamentals improve and little new supply is slated to come on the market.
Nickel has rallied of late amid a crackdown on mine production and licences in the Philippines, the world’s top nickel producer. Sherritt’s share price has also surged 89 per cent in the past 12 months, but has declined 79.3 per cent over five years. The stock rose 0.7 per cent on the Toronto Stock Exchange to $1.36 on Monday.
The company forecasts an increase in nickel production in 2017 to between 81,000 and 86,000 tonnes, up from 75,033 tonnes in 2016. However, it expects lower oil production from its Cuban reserves in 2017 — about 11,000 to 12,000 barrels of oil equivalent per day, down from 15,452 in 2016 as the operation winds down.
Sherritt reports fourthquarter and full year 2016 earnings on Feb. 16.