To those with fertile imaginations Cuba conjures up images of rum and cigars, but even those remain forbidden fruit for US consumers as long as the troglodytic Helms-Burton Act remains extant. What also remains off-limits for the US industrial consumer is Cuban cobalt and nickel. I thought it timely to visit the theme of Cuba as it relates to US resource security, one of my recurring themes.
I should be remembered that the US has little, to no, Nickel or Cobalt resources of its own. In fact dusting off the history books one would see that the Moa Bay complex in Cuba was actually developed during the Second World War to plug the US supply gap in these two important metals. Ox-like stubbornness since 1960 by the US “powers that be” might have been justified up until 1989 but subsequent to that the US should have been thinking of its own best interests in getting the Cuban resources in these two metals back into its orbit. Instead it has let petty self-interest of the fallen Cuban oligarchs cut off its nose to spite its face.
Cuba has a history of mining extending over a period of three hundred years. Since 1900 mining has pretty much been a constant activity and, during WWII, the mining of manganese, some copper, and nickel/cobalt was most important.
Cuban mineral production is largely state-controlled, although the government has made steps to amend the mineral laws and legislation. In 1993, Geominera was formed as a private company that utilized state funds. Geominera’s focus is on gold and base metal exploration, whilst foreign investors are currently developing nickel/cobalt and gold resources. I even ran into a Cuban delegation at a London mining event recently and went away with a CD of Cuban salsa music for my troubles.
According to the USGS, other minerals produced in the country included asphalt, bentonite, cement, chromite, clay, crushed stone, feldspar, gypsum, iron ore, lime, limestone, marble, salt, sand, steel, sulfuric acid, volcanic ash, and zeolite.
Nickel & Cobalt
Cuba is an important nickel and cobalt producer, ranking sixth in the world in terms of nickel and (fluctuatingly) accounts for 8% of the world’s cobalt production. The nickel resource comes from extensive laterite deposits that are considered among the largest reserves in the world. Cuba ranks with Canada, Russia, Australia and New Caledonia.
Unrefined nickel, plus cobalt, is Cuba’s largest export, in some years generating as much as $2 billion in export revenues. Cuban nickel is considered to be Class II with an average 90% nickel content.
The ore is processed on the island in two formerly US-owned plants at Nicaro and Moa Bay. Plants are also located at Punta Gorda and Las Camariocas. The province of Holguín, where the Moa Bay mines are located, is estimated to contain 34% of the world’s known reserves of nickel, or some 800 million tons of proven nickel plus cobalt reserves, and another 2.2 billion tons of probable reserves.
Sherritt’s Cuban Nickel/Cobalt Asset
The Moa Bay mines, now owned by Sherritt International (TSX: S), were once the property of Freeport in its pre-McMoran manifestation. They were initially started up during WW2 and largely paid for by the US government. Of the $119mn in capital of the Moa Bay Nickel Company, some $100mn had come from the US government and the rest from Freeport. The processing plant was closed down in 1947.
The back story to the squabbles over this asset are that Moa Bay Mining, a Cuba-based subsidiary of Cuban American Nickel, obtained a loan in 1957 to finance development of the mine in Cuba and in a processing plant in Louisiana. This was some rather diabolically bad credit analysis on the part of the lenders. But so what else is new at Citibank! In 1960 the government of Cuba expropriated the assets of Moa Bay Mining.
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