Tycoon Sandile Zungu's Madagascar nickel mine is back in production after a cyclone knocked it out for four months

Madagascar's Ambatovy nickel and cobalt mine has restarted production after a four-month shutdown caused by damage from Cyclone Gezani, the operation confirmed this week, marking the first significant operational milestone since South African billionaire Sandile Zungu's investment firm joined a consortium to acquire majority control of the mine from Japan's Sumitomo Corporation.

The mine expects to produce 2,500 tons of nickel and 250 tons of cobalt in June, according to figures reported by Reuters on June 11. The restart follows extensive infrastructure repairs conducted over more than 100 days. In a June 9 statement, Ambatovy chief executive Trevor Naidoo confirmed that the site's first acid plant successfully restarted on May 23. A second acid plant is expected to come online before the end of June, completing the repair programme triggered by the cyclone that struck in February 2026.

The restart is directly relevant to Zungu's investment thesis. His firm, Zungu Investments Company, known as ZICO, is co-anchoring the Ambatovy Mineral Resources Investment Holding consortium alongside Essenwood Partners, the Jersey-registered vehicle led by Jason Kluk, a former head of nickel trading at Glencore. AMRI agreed in May 2026 to acquire Sumitomo's 54.17 percent stake in Ambatovy for $418 million. The transaction is expected to close by March 2027. South Korea's state-owned Korea Mine Rehabilitation and Mineral Resources Corporation will retain the remaining 46 percent.

Sumitomo exits Ambatovy after more than 20 years carrying an asset that generated approximately $2.6 billion in cumulative losses, driven by persistent profitability challenges from lateritic processing costs, extended periods of low nickel prices and now cyclone-related shutdowns. The Japanese company is absorbing a one-time exit loss of approximately $445 million on the transaction. That Zungu and Kluk were willing to buy into Ambatovy at this moment, while the mine was idle and undergoing repairs, reflects their view that the asset's long-term value proposition is stronger than Sumitomo's exit suggests.

Nickel prices have been supportive of that thesis. By the time the acquisition was announced, prices had climbed to approximately two-year highs following Indonesia's announcement of plans to tighten its supply. Sulphur shortages linked to the Middle East conflict have additionally pushed the market toward its first deficit since 2021, improving the commercial backdrop for an operation that has historically struggled to generate returns in a low-price environment.

Ambatovy was built at an estimated cost of $8 billion and launched in 2009 with a design capacity of 60,000 tons of nickel and 5,300 tons of cobalt annually. Actual production has consistently fallen short of that target. In 2024, the mine produced 28,000 tons of nickel and roughly 2,500 tons of cobalt, less than half its nameplate capacity. The June restart target of 2,500 tons of nickel reflects a gradual return rather than an immediate return to full operation. The mine has not disclosed a production ramp-up plan or output targets for the full year.

The Ambatovy acquisition is one of two transformational moves Zungu has made in 2026. On June 1, his Sizekhaya Holdings consortium took over the operational management of the South African National Lottery under a new licence awarded by the National Lotteries Commission, replacing the previous operator Ithuba. The lottery contract, valued at R180 billion ($10.9 billion) over eight years, is one of the largest commercial contracts awarded to a Black-owned business in South African history.

Ambatovy contributed approximately $43.6 million to the Madagascar government through taxes, royalties and other payments in 2024, and spent more than $263 million with local suppliers. A sustained return to full production under the new ownership consortium would carry significant implications for Madagascar's economy, which remains heavily dependent on the mine's output and its downstream payments to the government and local contractors.