An article by a colleague of mine at our sister publication SpendMatters highlighted the plight of Cuba following 50 years of isolation under communist Fidel Castro’s regime.
The economy has been stuck in a time bubble with virtually no external investment and very limited export markets, resulting in a stagnation that has left the population well-educated but ridiculously poor by modern standards. Although Cuba isn’t blessed with untold riches in terms of natural resources it does have significant nickel reserves, and managed with soviet help to be a substantial nickel exporter in previous decades.
One western firm that persevered with their Cuban nickel operations was Canadian Sherritt International who mine nickel ore there and refine it in their west Canadian refinery. Reuters reports Toronto-based Sherritt is the largest independent natural resources company in Cuba and operates the Moa nickel mine in the eastern part of the island.
Due to the Cuban origin of its nickel and cobalt, the company is currently unable to export to the United States, nor is it able to buy US mining equipment to operate its mines. Indeed, some of Sherritt’s officers and directors have been barred from the US because of the Helms-Burton Act, Reuters reports.
The company hopes the situation will change next year. Sherritt derives nearly 3/4 of its revenue from operations in Cuba and about 95% of its revenue from its metals business, while Sherritt’s Cuban operations represented about 60% of the company’s net asset value. Not surprisingly, the firm’s shares jumped dramatically on the news of thawing US-Cuban relations, a development that may benefit many smaller enterprises on the island in the year ahead. Some of us at MetalMiner are looking forward to the day when we can freely import our favored Cuban cigars, although, personally, I will say they can keep their rum.