Economic Performance

Management Approach

Nickel and cobalt prices showed signs of recovery in 2017 following several years of challenging market conditions. Nickel prices improved by 27% while cobalt prices were up 130% in 2017 on a year-over-year basis. The gains were largely driven by improved supply-demand market conditions and the growing understanding that nickel and cobalt play key roles in the manufacture of batteries needed for the burgeoning electric vehicle market.

In 2017, Sherritt had net earnings of $293.8 million, up from a net loss of $378.9 million for 2016. The improvement was largely due to non-cash gains associated the restructuring of the Ambatovy joint venture (JV) and the reduction of Sherritt’s ownership interest from 40% to 12% in exchange for the elimination of $1.4 billion of debt from the company’s balance sheet. Excluding the impact of the JV restructuring, Sherritt incurred an adjusted loss of $317.1 million in 2017, compared to an adjusted net loss of $427.9 million for 2016.

Consistent with recent years, Sherritt’s focus in 2018 will centre on three strategic priorities:

  • Preserve liquidity and build balance sheet strength
  • Optimize opportunities in Cuban energy business
  • Uphold global operational leadership in finished nickel production from laterites


Please refer to our 2017 Annual Report for detailed information on our economic performance last year and an overview of how we plan on executing against our 2018 strategy.

Business Conduct

Management Approach

Our business conduct is a reflection of the values that are the foundation of our company. Our Purpose and Our Promises describe our guiding principles and how we expect them to be lived every day as we carry out our business. Our Business Ethics Code provides clear guidance to our workforce on what it means to act with integrity. It covers conflicts of interest, fraud and corruption, fair dealings, protection and proper use of the company’s assets, compliance with regulatory requirements, disclosure, confidentiality, and reporting mechanisms available to employees and contractors. Sherritt’s Policy Committee, made up of senior executives from various key functions, is responsible for reviewing and approving new and revised policies.

Globally, there has been a recent focus on eliminating corruption within companies, and between businesses and all levels of government. Many countries have passed anti-corruption legislation, imposing significant monetary and incarceration penalties for corrupt practices. Investigative activities by law enforcement agencies have also increased significantly, bringing effect to legislation.

As a Canadian company, we are subject to the Canadian Corruption of Foreign Public Officials Act (CFPOA), as well as anti-corruption laws in Madagascar and Cuba. The CFPOA prohibits Canadian business interests from making or offering improper payment of any kind to a foreign public official – or anyone acting on his or her behalf – where the ultimate purpose is to obtain or retain a business advantage.

Our Anti-Corruption Policy prohibits the violation of the CFPOA and other applicable anti-corruption laws. All divisions, groups and offices must undergo anti-corruption training and log all government meetings and payments. In Madagascar, governmental and commercial corruption presents a significant risk, whereas in Canada and Cuba, it does not. As such, we provide additional training, awareness-building and controls at Ambatovy, where all suppliers with standard contracts must also sign and adhere to our Anti-Corruption Policy.

Sherritt is very supportive of the transparent reporting of payments to governments. We are a Supporting Company of the Extractive Industries Transparency Initiative (EITI), to which we report in Madagascar. Visit this website to review EITI Madagascar’s latest report, which was published in 2015. In 2017, Madagascar began the process for Validation against the EITI Standard. For more information on Validation, visit the EITI website. We have also developed a process for meeting the public reporting obligations of Canada’s Extractive Sector Transparency Measures Act (ESTMA), the requirements of which are very similar to those of EITI. Sherritt’s first Extractive Measures Transparency Act Report is now available online. The report, which is a requirement of the Government of Canada, covers certain payments that Sherritt made to all levels of government in Canada and abroad in 2017. Additional commentary on transparency reporting can be found on the Community Development page.


Ethical Conduct

In 2017, 26 reportable concerns were submitted through the Whistleblower system. Of the 26 reportable concerns, 13 were deemed to warrant an investigation and 12 were subsequently closed. These were investigated internally by Internal Audit and/or Management. The concerns were mainly related to allegations of fraud within the company, such as inappropriate business relationships with vendors and conflicts of interest. The remaining reportable concerns that were not investigated were deemed to be HR matters and were not investigated further.

Upon commencing employment with Sherritt, all employees are required to review and sign off on their understanding and acceptance of our Business Ethics Code.


We overhauled our Anti-Corruption Policy in 2015, and made a subsequent update in 2017. Training sessions were held across the company to familiarize employees with the requirements and to address their questions. The training provided a valuable opportunity to clarify what constitutes corruption and conflict of interest. Trainers emphasized that the most important action an employee can take if faced with an uncomfortable situation is to ask for assistance from the person responsible for overseeing the anti-corruption program in his or her workplace.

One hundred percent of our entire eligible workforce was trained by the end of 2016, and subsequent refresher training for the updated policy occurred in 2017. As part of the training, employees had to sign the policy to demonstrate their understanding and commitment to the principles.

In Cuba, only expatriate employees and a small number of Cuban nationals who work directly for Sherritt were required to take the training, given the nature of our joint venture relationships and our agreement with the state-run agency that provides our operations with workers.

Since the beginning of 2017, all new employees (nationals and expatriates) at Ambatovy are required to complete the SkillMine anti-corruption module as part of their onboarding program, within 6 months of their employment commencement date. At the end of 2017, 92% of new employees had completed the online module. The remainder have been advised to complete the module in 2018. In addition, Ambatovy has made it a priority to ensure suppliers were aware of the contents of the policy by rolling out a “train the trainer” program for suppliers. As of 2017, Ambatovy trained 274 contract workers from more than 100 suppliers as part of the program. These “trainers” have gone on to train more than 8,600 contract workers on our policy.

Performance commentary on transparency reporting can be found under Community Development.

Human Rights

Management Approach

Understanding and expectations related to human rights in the mining and energy sectors began to evolve 15 to 20 years ago as companies increasingly turned their attention to countries that are less developed. Many of these countries were – and continue to be – characterized by weak governance and respect for the rule of law, extreme poverty, low-cost labour, a lack of business regulations, and less-than-ideal mechanisms to protect the human rights of their citizens. These and other factors would contribute to instances of conflict in natural resource development – often involving communities, companies, governments and security officers – as a means of resolving the grievances of local residents.

The work of Professor John Ruggie, on behalf of the United Nations, defined a practical human rights framework, known as the United Nations Guiding Principles on Business and Human Rights, which outlines the roles for state and business actors in the protection of human rights. It also identifies “access to remedy” for anyone with a human rights complaint as the single most important element for business to maintain its social license.

Although human rights issues do not currently represent a top risk at Sherritt, they are an inherent risk to all mining and energy production sites. To manage this risk, we are aligning with international best practices and expectations regarding human rights. We developed an enterprise-wide policy that commits to upholding the Universal Declaration of Human Rights, along with other international principles.

The primary human rights–related considerations for Sherritt include access to remedy; the interaction between security personnel and communities near our operation in Madagascar (addressed under Site Security); labour rights (addressed under Employee Relations); and children’s rights in Madagascar.

At Sherritt, remedies for complaints, up to and including potential human rights violations, are provided through the community grievance mechanisms in place at the site level. Grievance mechanisms are processes to receive, acknowledge, investigate and respond to community complaints. These are valuable early-warning systems that can resolve sources of friction between stakeholders and companies, and can, over time, build trust. We have incorporated best-practice guidance from a number of sources into our recently developed Grievance Mechanism Standard, to ensure it is both practical and credible. A few examples of the types of community grievances we have received in recent years include: impacts to livelihoods during construction of Ambatovy, allegations of inappropriate hiring or contracting practices, and environmental impacts of operation and/or construction activities.

Currently, we have a formal community grievance mechanism in place at Ambatovy. It includes an external grievance committee, comprising respected members of local communities, that meets quarterly to review the grievance management process and resolutions, and to provide feedback and suggestions for improvement to management.

At our site in Fort Saskatchewan, we have a long-established informal process for responding to complaints from external parties and are in the process of finalizing the implementation of Sherritt’s Grievance Mechanism Standard. In Cuba, there is a state-run system where citizens can file complaints against an entity, organization or enterprise whose activities they feel are adversely affecting their well-being. Commissions are set up to investigate grievances and develop action plans to address them. Sherritt’s management team, or that of our Cuban partners, participates in the process to address any grievances related to our operations.

Our Human Rights Policy also articulates our commitment to the Convention on the Rights of the Child. Violation of children’s rights is a fairly low risk in Canada and Cuba, but in Madagascar this risk is more significant. At Ambatovy, we have a zero-tolerance policy for child exploitation that the entire workforce must sign. This policy was drafted with the support of UNICEF, in response to an incident that occurred at Ambatovy several years ago. Refer to this blog posting for more information. We also support youth-led peer awareness campaigns on child exploitation issues and HIV/AIDS in Madagascar. All contracts or agreements awarded to local suppliers include clauses requiring the strict respect of international rules towards child labour. Ambatovy’s Local Business Initiative regularly verifies that these requirements are upheld.

Human rights issues, including the exploitation of children in the mining industry, are something Sherritt takes very seriously. Sherritt does not mine cobalt in conflict areas. By monitoring third-party feed sources, Sherritt ensures cobalt mined from any conflict area does not enter our supply chain at any point.


Third-party Review

In 2016, the United Nations Development Programme conducted a due-diligence review of Ambatovy, including questions on human rights, in order for Ambatovy to enter into a new partnership agreement with the United Nations System. Ambatovy passed the review and the agreement was signed in November 2016. No further third-party human rights assessments were undertaken at Sherritt’s sites in 2017.

Human Rights Grievances

There were no human rights–related grievances reported at any of our operating sites in 2017. (Other types of grievances are captured and explained under Employee Relations and Stakeholder Engagement.)

Children’s Rights

At Ambatovy, where risks to children are higher because of the operating jurisdiction, we have been particularly engaged with the Child Rights and Business Principles to help put a child rights lens on work with contractors and suppliers in the supply chain. As of 2017, more than 9,000 suppliers have committed to following our children’s rights requirements, which include zero-tolerance towards child sexual exploitation and child labour, among other concerns. Any supplier found to be in violation of these contractual requirements would be immediately terminated. In 2017, Ambatovy staff undertook a refresher four-part training session on the Child Rights and Business Principles to be able to reinforce that messaging throughout Ambatovy’s policy reviews and contract renewals with vendors in 2018.

Sherritt continued to participate in the UNICEF Canada-led Child Rights and Security Working Group established to focus on security-related impacts on children caused by the extractive sector. Other contributors include UNICEF, the Government of Canada, several global mining and energy companies, international non-governmental organizations, and other governments. In 2017, the Working Group published the Child Rights and Security Checklist, designed to assist governments and companies in assessing the degree to which their security frameworks respect children’s rights, and in early 2018, the Child Rights and Security Handbook, an implementation companion to the checklist, was launched.

We continue to provide assistance to child-protection networks near our mine and plant sites in Madagascar in developing funding proposals for international donors. See this case study for more on our work to support children and youth in Madagascar.