The head of Sherritt International Corp. (S), the biggest foreign investor in Cuba, said industries from mining to infrastructure are ripe for development as the island nation moves tentatively to open up trade with the U.S.
The Toronto-based company, which has been mining nickel in Cuba for two decades and generates about 75 percent of its revenue there, has talked to the government about possible new investments in Cuba over the longer term, Chief Executive Officer David Pathe said.
“There’s huge opportunities for infrastructure in Cuba,” Pathe said in an interview in Bloomberg’s Toronto office. “There’s still a big power-generating deficit in Cuba, and there are other resource opportunities.”
U.S. and Cuban diplomats concluded what both sides called encouraging talks last week on restoring ties after the two countries unexpectedly said last month they would begin steps to normalize relations after a half century of U.S. trade and travel restrictions.
There are other ore bodies and “quite vast” nickel reserves on the eastern end of the island where Sherritt has been operating, and the Cuban government has indicated it’s interested in foreign investment in mining, Pathe said.
“We’ve talked to them about things that we might be able to do there over the longer term,” he said. “There could be more interest from international companies.”
Progressive Opening
For now though, it’s business as usual for Sherritt. The company will only see significant benefits if the U.S. president succeeds in getting Congress to lift the full trade embargo. Pathe doesn’t see “anything happening quickly” on that, or on lifting the 1996 Helms-Burton Act, which among other things restricts Sherritt executives and directors and their families from entering the U.S.
There will be “a continued opening,” Pathe said of Cuba. “What could happen over a course of years is that this just occurs progressively.”
The embargo has added a layer of challenges for Sherritt. It’s meant no metal sales to U.S. customers, no Caterpillar Inc. trucks at its mines in the country, and definitely no trips to Disney World for Pathe and his family, who’ve been banned from visiting the U.S. under Helms-Burton.
On the other hand, Pathe said the regulatory climate in Cuba has been stable at a time when other countries have raised taxes and royalties, squeezing profits for mining companies. And while decision-making in the country can be frustratingly slow, investors can succeed if they can convince government officials they can bring value to the country, he said.
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