Sumitomo Corporation (Sumitomo; CEO:Mr.Motoyuki Oka) announced that Sumitomo, Dynatec Corporation (Dynatec;CEO:Mr.BruceV.Walter), Korea Resources Corporation (KORES) and SNC Lavalin Inc. (SNC) have entered into a shareholders agreement, whereby KORES will acquire a 27.5% interest and SNC will acquire a 5% interest in Ambatovy Nickel Project(The Project) in Madagascar. As a result, the shareholders' interest of each companies will be Sumitomo 27.5%, Dynatec 40% ,KORES 27.5% and SNC 5%.

Now Sumitomo is proud that the Project would be the very first project on which Japanese company works jointly with Canadian and Korean companies for the development of Nickel resources and become an independent big nickel/cobalt player, under the fierce competition to secure this kind of strategic mineral resources and mega-merger by the mining giants to oligopoly such non-ferrous metals worldwide.

The Project is one of the largest scale nickel project in the world as an independent producer, with annual design capacity of 60,000 tonnes on nickel metal, 5,600 tonnes of cobalt and approximately 190,000 tonnes of ammonium sulphate from 1st quarter 2010 and 27-year estimated Project life, with the potential for more. The capital cost for the Project is estimated total US$2.50billion.

Feasibility study of the Project has been already completed in April 2006 and detailed engineering work and project control estimate work are under processing. The Project has submitted a final environmental assessment (EA) to the Office de l'Envirionmenta (ONE). EA approval is expected to be received by the end of 2006.

The Project is continuing to advance discussions with potential senior lenders who expressed high interest to support, such as Japan Bank for International Cooperation, Export Development Canada, the European Investment Bank and so on, with a view to concluding project debt financing arrangements for 50%-60% of the Project's total funding requirements by early next year. The Project is expected to commence the construction by the second quarter of 2007 after each sponsor's board approval.

Dynatec is a growing mining company with extensive mining and metallurgical expertise, developed over many years as a leading service provider to the mining industry.

SNC is one of the leading groups of engineering and construction companies in the world, and a global leader in the ownership and management of infrastructure. SNC provides engineering, procurement, construction, project management and project financing services to a variety of industry sectors, including agrifood, biopharmaceuticals, chemicals and petroleum, environment, heavy construction, mass transit, mining and metallurgy, power and water management.

KORES is a state-owned South Korean corporation that provides financing for many South Korean investments and joint ventures. Founded in 1967, KORES' mandate is to pursue resource development opportunities that will ensure the supply of resource materials for South Korea's expanding industrial economy, which is led by large-scale ship, automobile and steel production.

The Ambatovy sponsor group brings together a combination of technology, operations, project execution and financial capabilities with which to drive the Project forward. Dynatec will apply its extensive hydrometallurgical experience as Project operator; SNC brings its leading expertise in the engineering and construction of major mining projects and substantial knowledge of the Project having coordinated the Project's feasibility study; and both Sumitomo and KORES bring considerable large project experience, financing and marketing capability.

The nickel is used for the stainless steel ,special steel (heatproof and anti-corrosion high alloy), the battery materials, and the electronic industry materials, etc. , and the nickel demand is expanding in the advanced country as a material related to the high technology. The nickel industry is under oligopoly by major producers. The chance to participate into the this market is getting extremely limited with the circumstances that the Nickel resources exist unevenly.

Nickel Supply and demand is stringent under the current market, and the Nickel stock gets depressed to the historical low level, and, Nickel price is the highest level for the time being.
Under current situation, development of Nickel Project in cooperation with Japanese, Canadian and Korean companies contributes to the stability of supply and demand of nickel.


In addition, Madagascar is the world's fourth largest island, located 500 kilometers off the east coast of southern Africa, and steadily developing under the guidance of World Bank. It is convinced that this project can contribute to the development and sustainable growth of the economy in this region.

Under the circumstance of oligopoly by major mining companies, Sumitomo have explored the opportunity to enter into the Nickel Resources Development project by establishing the JV with Canadian and Korean companies. Sumitomo believes that this Project can be managed and maintained with high profitability for a long period and highly contribute to the growth of the company by diversifying the portfolio of mineral resource business in Sumitomo.