The Trump administration’s hard line against Cuba pushed Toronto-based Sherritt International Corp. to the brink. Now, an ex-adviser to the U.S. president may be the Canadian mining company’s salvation.
The nearly 99-year-old company, whose former chief executive was once known as Fidel Castro’s favourite capitalist, has staked its business on a bet few Western companies would touch.
After entering Cuba in the 1990s, Sherritt developed a nickel-and-cobalt mine through a joint venture with the state before expanding into energy. The result was a sprawling business that’s survived commodity busts, U.S. political pressure and economic instability on the island.
That wager abruptly unravelled this month, plunging Sherritt into turmoil. After U.S. President Donald Trump expanded sanctions on the communist country, Sherritt initially announced plans to dissolve its mining venture in Cuba. On Wednesday, the U.S. charged former Cuban president Raúl Castro with murder, sharply escalating a standoff with Havana as the Trump administration attempts to reshape the island’s political order.
But just days after Sherritt announced its retreat from Cuba, a potential rescuer emerged in the form of a Dallas family office linked to Ray Washburne, a real estate executive appointed by Trump in 2017 to lead the Overseas Private Investment Corp. Washburne’s Gillon Capital signed a non-binding preliminary agreement on Wednesday that would hand the family office a controlling stake in Sherritt.
“It came out of nowhere,” Peter Hancock, Sherritt’s interim chief executive officer, said in an interview. “I would like to tell you that I’m a business genius and that I knew an American entity would see that it could create value in the situation that Sherritt was in. But no, I didn’t foresee that.”
As Trump’s foreign policy during his second term turns markedly more aggressive, Sherritt is still at risk of losing its Havana gamble. The saga underscores the dangers facing companies and investors from shifting geopolitics amid a rapidly changing world order.
It’s not clear whether Sherritt’s preliminary pact with Gillon signals a potential shift in Trump’s Cuba strategy. On Wednesday, he played down the need to further ratchet up pressure on the Cuban government after the charges against Castro. But for Hancock, the sudden backing from Gillon helped “bridge the huge gap” between Sherritt and the administration.
“This deal happened because an actor in the United States was able to make a case to the U.S. State Department,” he said. “We were collateral damage in a larger policy objective for the United States.”
Sherritt was founded in 1927 and named after Carl Sherritt, a trapper who staked copper prospects in Manitoba. The company’s first foray into Cuba was steered by Ian Delaney, who became CEO after a proxy fight in 1990 and secured a deal with the Castro government one year later. The state agreed to sell Sherritt unprocessed nickel from Moa, a mine in eastern Cuba that was nationalized after the country’s 1959 revolution.
It was a milestone deal for the Canadian firm, which needed raw material to feed its key asset: a refinery in Alberta. The company entered into a joint venture agreement in 1994 with the state to operate Moa, which produces cobalt and nickel, both key metals for the energy transition and providing power to data centres.
For years, Sherritt was enormously successful in Cuba. Its market capitalization jumped to almost $5 billion (all figures Canadian) in 2008, while the stock traded as high as $18. Sherritt, by that time, had poured significant investment into the country, including stakes in electricity, oil and natural gas ventures alongside state companies.
Sherritt executives became the first people barred from entering the U.S. under the Helms-Burton Act, a law passed in 1996 to target firms doing business in Cuba. But Canada and several European nations opposed the law and maintained diplomatic ties with Havana, allowing Sherritt to keep selling most of its nickel and cobalt into those markets, as well as Asia.
Yet at the height of Sherritt’s rise following its success in Cuba, the company made a costly bet on a nickel project in Madagascar. The decision would ultimately shred its balance sheet, driving debt to almost $2.5 billion at its peak in 2013. Then came a prolonged slump in nickel prices, leaving the company periodically teetering on the brink of insolvency.
Saddled with a heavy debt load and years of weak cash flow, the company became even more reliant on Cuba, exiting other assets including its Canadian coal business to fund loan repayments and eventually writing off its Madagascar venture. Today, Cuba accounts more than 70 per cent of the company’s asset base on a book value basis.
“They had an ample opportunity to eliminate their indebtedness entirely,” Jeffrey Gavarkovs, a managing partner at Northstream Capital Inc., said in an interview. But “the combination of Cuba and a debt load that was a little bit too heavy was their poison pill.”
Although Sherritt continued receiving distributions from its power and nickel operations, the company spent more than $100 million on an offshore well, a higher-risk category of oil exploration, Gavarkovs said. The effort yielded a well that was ultimately written off as uneconomic.
But according to Gavarkovs, who owns Sherritt bonds, the company’s biggest flaw was its bloated corporate overhead for what had effectively become a single-asset mining company. The company also spent millions trying to fend off several activist campaigns against it, he added. Last year, investment firm Pala Assets Holdings won its battle against Sherritt, resulting in the resignation of CEO Leon Binedell and a shakeup of the board.
When American forces captured Venezuelan leader Nicolás Maduro in January, investors began speculating that Cuba could be the Trump administration’s next target. In Venezuela’s case, foreign oil and mining companies swarmed into the country after Maduro’s arrest, with Chevron emerging as one of the clearest winners.
But unlike Chevron, which has a diversified asset base, Sherritt was facing a worsening fuel shortage as the U.S. blocked Venezuelan exports to Cuba. The company announced plans to pause mining at Moa in February after receiving notice that planned fuel deliveries could not be fulfilled.
As Cuba’s economy continued to crumble, with mass blackouts sweeping the island as Trump tightened his squeeze on the nation of 10 million people, Sherritt faced a choice: keep operations going at a loss and at reduced capacity, or mothball the company’s most valuable asset. In late March, the company announced it was seeking an emergency cash injection of as much as $50 million to support Moa.
After Trump’s expansion of Cuba sanctions on May 1, Sherritt abruptly decided to relinquish its joint venture stakes on the island. But soon after, the company reversed course.
Hancock was at home in Halifax on Victoria Day, watching the Giro d’Italia cycling race on TV, when the phone rang. On the other end was Washburne, calling with his offer for Sherritt.
Two days later, the Canadian company announced it had signed a non-binding term sheet with Gillon.
It’s far from certain that Ottawa will support a U.S. investor taking majority ownership of Sherritt, however. Canada instituted a new policy in 2024 to make it more difficult for foreign companies to take control of Canadian critical minerals assets.
To Ben Rowswell, a former Canadian ambassador to Venezuela, the move by a Trump-friendly investor to take control of Sherritt in Cuba exemplifies what’s become known as the “Donroe Doctrine,” the U.S. president’s take on Washington’s 19th-century push for hemispheric domination.
The latest move provides “further insight into the changing character of the U.S. relationship with the region, as it’s turning into an extractive predator” that uses its power over all countries, said Rowswell, now a consultant with strategic advisory firm Catalyze4.
For the government of Prime Minister Mark Carney, any attempt to block the prospective takeover of a nearly century-old Canadian company by an American investor might complicate efforts to renew a free-trade agreement with the U.S., Rowswell said.
A spokesperson for Canada’s industry department said the government welcomes foreign investment that benefits Canada’s economy, but declined to comment on specific transactions.
Despite the potential deal with Gillon, Sherritt’s situation remains tenuous. Three board members have resigned from Sherritt, leaving just Hancock and one other director. Its chief financial officer and its auditor also departed this month. The company now trades as a penny stock, with a market capitalization near $80 million. Without essential nickel and cobalt supplies from Cuba, the available inventory at the company’s Alberta refinery will run out in mid-June, it said earlier this month.
“A lot of things will need to happen to get to the state where the full value is realized,” said Hancock, adding that sourcing key inputs such as fuel and sulphur would also be critical to unlocking Sherritt’s full potential.
The Fort Saskatchewan refinery is one of just a few nickel processing facilities in North America. As governments and manufacturers race to build critical-minerals supply chains outside of China, the facility carries growing strategic importance, according to Northstream’s Gavarkovs.
For Hancock, a former engineer with commodities trader Glencore Plc, there have been “a lot of very unexpected twists and turns” since he stepped in as interim CEO of Sherritt in December.
Gillon is “very, very familiar with the business and the value that they see down the track,” he said. “This deal signals that they believe Sherritt has got a real bright future when things normalize in Cuba.”
