UPDATE 1-Madagascar's Ambatovy mine says new tax rules halt nickel shipments

Thu Feb 18, 2016 7:17am EST
 
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(Recasts, adds comments from Ambatovy statement)

ANTANANARIVO Feb 18 (Reuters) - The Madagascan arm of Sherritt International said on Thursday containers carrying nickel had been prevented from leaving the island's Toamasina port due to new regulations, and unless the situation changed the mine could only stay open for a week.

The $7 billion Ambatovy mining project, 40 percent owned and operated by Sherritt, has been hit by record low nickel prices and management has been forced to lay off more than 1,000 of its workforce over the past year.

Ambatovy said in a statement it was seeking a meeting with Madagascan President Hery Rajaonarimampianina to discuss new Advance Cargo Declaration (ACD) regulations, which levy a $100 fee on every shipping container, as it believes it should not be applied to Ambatovy.

Ambatovy said that due to enforcement of the ACD regulation introduced by the transport ministry, it was also unable to ship spare parts and raw materials, limiting its cash flow.

"The blocking of containers at the Port means that Ambatovy has no income and cash flows, already very low and affected by the nickel price, the lowest in history, is increasingly critical," Ambatovy said in a statement.

"Ambatovy can only survive for a week in the current circumstances."

Ambatovy, Madagascar's biggest foreign direct investment and one of the world's largest nickel and cobalt plants, added the implementation of ACD represented "additional and unexpected costs of several million dollars over the duration of the project"

If the government does not instruct shipping companies to accept Ambatovy cargo without implementing ADC, Ambatovy said it "would be forced to take drastic measures before the end of next week". The company did not elaborate on its . (Reporting by Lovasoa Rabary; Writing by Drazen Jorgic; Editing by George Obulutsa and Mark Potter)