Sumitomo Metal Mining books $270M hit on Philippine nickel refinery

Sumitomo Metal Mining took a 42.553 billion yen ($270 million) impairment loss on Nov. 10, 2026, writing down its Philippine nickel smelting subsidiary as low-cost Indonesian supplies depressed global metal prices.

The writedown forced the Japanese metals producer to cut its full-year consolidated net profit forecast by 25.5% to 161 billion yen. Net profit is now expected to fall 8.7% compared with the previous fiscal year, the company said.

Under the Tokyo Stock Exchange filing, tangible fixed assets at Coral Bay Nickel Corporation were reduced from a carrying value of 41.984 billion yen to recoverable value. The loss was recorded within cost of sales for the April-September fiscal half.

The impairment followed an accounting revaluation of asset retirement obligations at the Palawan processing site. Sumitomo Metal Mining raised projected dismantling and environmental restoration liabilities by 41.0 billion yen after revising closure plans under Philippine mining regulations.

Coral Bay is now scheduled to halt operations permanently during the upcoming three-year business plan covering fiscal 2028 through fiscal 2030. The facility launched commercial operations in 2005 as one of the world's first commercial high-pressure acid leach plants.

High-pressure acid leach, known as HPAL, treats low-grade nickel laterite ore with sulfuric acid inside autoclaves at high heat and pressure. The process extracts nickel and cobalt to yield intermediate chemicals required for advanced lithium-ion batteries.

Coral Bay has produced approximately 24,000 metric tons of nickel intermediate annually for two decades. The plant processes low-grade limonite ore supplied from the adjacent Rio Tuba mine operated by Nickel Asia Corporation.

Rapid expansion of Chinese-backed HPAL capacity in Indonesia triggered an overwhelming surge in mixed hydroxide precipitate, an intermediate nickel chemical known as MHP. The resulting surplus caused benchmark nickel prices to collapse across international commodity exchanges.

The London Metal Exchange nickel cash price averaged $7.88 per pound during the April-September half, according to company earnings disclosures. That price level failed to cover rising operational overheads at traditional merchant refining facilities.

Sumitomo Metal Mining stated that lower metal prices, declining local ore grades and rising energy costs destroyed the economic viability of the Palawan site. Processing lower-grade ores required higher sulfuric acid consumption and raised operating unit costs.

The impending closure removes a cornerstone of the non-Chinese battery supply chain. Intermediate nickel sulfide from Coral Bay is shipped directly to Japan for processing at the Niihama Nickel Refinery in Ehime Prefecture.

Refined intermediate chemicals from Niihama supply the company's Isoura battery materials plant. That facility produces nickel-cobalt-aluminum, or NCA, cathode active materials formulated for high-energy electric vehicle battery cells.

Sumitomo Metal Mining serves as the sole merchant supplier of NCA cathode materials to Panasonic Energy. Panasonic packages the cathode powders into cylindrical battery cells destined for Tesla electric vehicles sold in North America.

Automakers targeting subsidies under the United States Inflation Reduction Act rely heavily on supply networks that bypass Chinese extraction and refining. Coral Bay represented one of the few long-standing, non-Chinese sources of compliant battery-grade intermediate nickel.

Sumitomo Metal Mining continues to operate a second Philippine HPAL plant, Taganito HPAL Nickel Corporation, located in Surigao del Norte. Taganito holds roughly 1.5 times the capacity of Coral Bay, producing 30,000 metric tons of nickel intermediate annually.

The company's smelting and refining segment swung to an operating loss during the interim period due to the Coral Bay write-off. Segment guidance was revised down to a full-year loss of 23 billion yen from an earlier projected profit of 63 billion yen.

To offset earnings volatility and return capital to investors, the board authorized a 30 billion yen share buyback on Nov. 10. The company will repurchase up to 7.5 million shares between Nov. 11, 2026 and Jan. 29, 2027.

Longer-term raw material procurement remains under development in Australia. Sumitomo Metal Mining is funding a definitive feasibility study with Ardea Resources for the Goongarrie Hub nickel project, targeting a final investment decision in late 2026.

Commercial production at the Australian site is not expected until fiscal 2028 or later. Sumitomo Metal Mining previously abandoned plans to build a third HPAL refinery in Pomalaa, Indonesia, in 2022 due to partner disagreements.

The corporate filing does not state how the Japanese smelter will replace Coral Bay's intermediate feed once production halts before 2030. The company also has not published revised asset valuations or remaining mine lives for the Taganito plant.

Sumitomo Metal Mining will disclose updated capital expenditure budgets and mineral procurement targets at its next formal business strategy presentation in Tokyo in May 2027.