September 13, 2012 / 4:03 PM / 6 years ago

Madagascar signs operating permit for Ambatovy mine

ANTANANARIVO (Reuters) - Madagascar has signed an operating permit allowing Canada’s Sherritt International Corp (S.TO) and partners to begin production at what will be one of the world’s biggest nickel mines.

Mines Minister Daniella Rajo Randriafeno said the permit would be valid for six months. During that time, a technical, financial and environmental audit would be carried out by an international firm.

“The government has signed the permit. Mining can begin. The rest depends on their planning,” Randriafeno told Reuters.

The $5.5 billion Ambatovy mine will have a production capacity of 60,000 tons of refined nickel annually for the next three decades.

Shares in Sherritt climbed 0.9 percent to 4.76 Canadian dollars after the permit was made public.

Ambatovy’s communication office declined to comment but said a statement would be issued on Friday.

Under the terms of the permit, Ambatovy will have to deposit $50 million to serve as a guarantee in the event of environmental problems. A second fund worth $25 million will finance infrastructure projects.

Writing by Richard Lough; Editing by James Jukwey and David Holmes

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