Cuba Thaw Offers Prospect of U.S. Travel, Cost Cuts for SherrittLiezel Hill and Scott Deveau
Moves by the U.S. to normalize relations with Cuba raise the prospect of lower costs for Sherritt International Corp.’s nickel and energy operations on the island. It may also mean fewer travel restrictions for its directors.
“That would certainly be desirable,” Chief Executive Officer David Pathe said today in an interview.
Pathe is among several people at Toronto-based Sherritt barred from entering the U.S. under the 1996 Helms-Burton Act, which hardened trade sanctions against Cuba. President Barack Obama today announced measures to loosen trade and travel restrictions and said he will work with Congress to lift the full embargo.
While a timeline for such a move is as yet unclear, it would allow Sherritt to buy American mining equipment, sell nickel and cobalt in the U.S. and access more investment there, Pathe said. The travel curbs don’t affect Sherritt’s operations but they do have a personal impact on some people at the company because they can apply to spouses and children, he said.
“It means you’re not taking your kids to Disney World for March break,” Pathe said by phone. “It’s an inconvenience.”
Sherritt jumped 26 percent to C$2.87 in Toronto today, the biggest gain in six years.
“Opening banking and diplomatic relations between Cuba and the U.S. could lift a layer of uncertainty off Sherritt’s operations in that country,” Greg Barnes, a Toronto-based analyst at TD Newcrest Inc., said in a note.
Sherritt’s Cuban operations, including a 50 percent stake in the Moa nickel and cobalt joint venture, accounted for 74 percent of its revenue last year, according to data compiled by Bloomberg. The company has operated there for more than 20 years. That experience is “a real asset,” Pathe said.
“Cuba has suffered for a long time under the embargo and the Cuban people have suffered under the embargo,” he said.’
Ian Delaney, who was CEO until January 2012 and chairman until May last year, said it’s hard to predict how far the U.S. will go toward fully lifting the embargo.
“The President has done pretty much what he can do within the limits of his executive authority,” Delaney said today by phone. “But how far it can go under the present circumstance remains to be seen.”