How Trump’s crusade against Cuba threw a 99-year-old mining company into chaos

The Trump administration’s tough stance against Cuba has brought Sherritt to the brink of collapse. Now, a former advisor to the US president could be the Canadian mining company’s salvation.

The company, which is about to turn 99 years old and whose former CEO was known as Fidel Castro’s “favorite capitalist”, made a bet that few Western companies would accept. After entering Cuba in the 1990s, Sherritt developed a nickel and cobalt mine in a joint venture with the State and later expanded into the energy sector. The result was a comprehensive business that survived commodity down cycles, U.S. political pressure and economic instability on the island.

That bet suddenly fell apart this month, throwing Sherritt into turmoil. After President Donald Trump expanded sanctions against the communist country, the company initially announced plans to dissolve its joint venture mining in Cuba. On Wednesday, the US formally charged former Cuban President Raúl Castro with murder, escalating the confrontation with Havana as the Trump administration tries to reshape the political order on the island.

But just days after announcing the withdrawal from Cuba, a potential savior emerged for Sherritt: a Dallas family office linked to Ray Washburne, a real estate executive appointed by Trump in 2017 to head Overseas Private Investment. Washburne-based Gillon Capital on Wednesday signed a non-binding preliminary agreement that would give the family office a controlling stake in Sherritt.

“This came out of the blue,” Peter Hancock, Sherritt’s interim CEO, said in an interview. “I would like to say that I am a business genius and that I knew that an American entity would see an opportunity to create value in the situation that Sherritt found itself in. But no, I did not see it coming.”

As Trump’s foreign policy in his second term becomes much more aggressive, Sherritt continues to be at risk of losing its bet on Havana. The story illustrates the risks for companies and investors in the face of rapidly changing geopolitics, amid a new world order. While large multinationals also suffer from conflict-related losses, the risk is even more acute for companies with assets concentrated in a single country outside the US.

It is unclear whether the preliminary agreement with Gillon signals a change in Trump’s Cuba strategy. On Wednesday, he downplayed the need to further increase pressure on the Cuban government following the accusations against Raúl Castro. Representatives for Gillon and the State Department did not immediately respond to requests for comment.

For Hancock, however, Gillon’s sudden support helped “bridge a huge gap” between Sherritt and the Trump administration.

“This agreement happened because an agent in the United States managed to make a case with the State Department,” he said. “We were collateral damage to a larger U.S. policy objective.”

Sherritt was founded in 1927 and named after Carl Sherritt, a hunter who registered rights to copper deposits in Manitoba. The company’s first foray into Cuba was led by Ian Delaney, who became CEO after a corporate dispute in 1990 and reached a deal with the Castro government the following year. The state agreed to sell Sherritt unprocessed nickel from Moa, a mine in eastern Cuba nationalized after the 1959 revolution.

It was a milestone for the Canadian mining company, which needed raw materials to feed its main asset: a refinery in Alberta. In 1994, the company entered into a joint venture with the State to operate Moa, which produces cobalt and nickel, key metals for the energy transition and to supply data centers.

For years, Sherritt has had great success in Cuba. Its market value reached almost 5 billion Canadian dollars (US$3.6 billion) in 2008, with shares trading at up to C$18. At that point, the company had already made significant investments on the island, including participation in electricity, oil and natural gas projects in partnership with state-owned companies.

Sherritt executives were the first people banned from entering the United States under the 1996 Helms-Burton law, which targets companies doing business in Cuba. But Canada and several European countries opposed the law and maintained diplomatic ties with Havana, which allowed Sherritt to continue selling most of its nickel and cobalt to those markets and to Asia.

At the height of the advance in Cuba, however, the company took an expensive bet on a nickel project in Madagascar. The decision ended up blowing up its balance sheet, taking debt to almost C$2.5 billion in 2013. Then came a long phase of depressed nickel prices, leaving the company periodically on the brink of insolvency.

With heavy debt and years of weak cash generation, Sherritt became even more dependent on Cuba, selling other assets — including its coal business in Canada — to pay off debts and, ultimately, writing off the project in Madagascar. Today, Cuba accounts for more than 70% of the company’s asset base in book value.

“They had ample opportunity to completely eliminate debt,” Jeffrey Gavarkovs, a partner at Northstream Capital, said in an interview. “But the combination of Cuba and a debt level that was a little too high was the poison.”

Although it continued to receive dividends from its energy and nickel operations, the company spent more than C$100 million on an offshore well — a riskier type of oil exploration —, Gavarkovs said. The result was a well considered economically unviable and completely lowered.

In the view of Gavarkovs, who holds Sherritt debt, the biggest problem was bloated corporate overhead for what had effectively become a single-asset mining company. Instead of ensuring that holders of unsecured notes received the cash interest stipulated in the contract, the board would have given priority to granting cash-settled stock options, he said.

The company has also spent millions trying to fend off various activist campaigns. Last year, asset manager Pala Assets Holdings won its dispute with Sherritt, which led to the resignation of CEO Leon Binedell and the renewal 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 the case of Venezuela, major US oil companies and Western mining companies rushed to the country after the arrest, with Chevron emerging as one of the main winners.

But unlike Chevron, which has a diversified asset base, Sherritt faced worsening fuel shortages as the US blocked Venezuelan exports to Cuba. In February, the company announced plans to temporarily suspend mining at Moa after being informed that scheduled fuel deliveries would not be met.

With the Cuban economy collapsing, mass blackouts and Trump’s grip on the country of 10 million people, Sherritt found itself faced with a choice: maintain operations at a loss and reduced capacity or paralyze its most valuable asset. In late March, the company said it was seeking an emergency injection of up to C$50 million to support Moa.

Following the expansion of sanctions on Cuba on May 1, Sherritt abruptly decided to give up its interests in joint ventures on the island. Shortly afterwards, he turned back.

Hancock was at home in Halifax on a holiday in Canada, watching the Tour of Italy cycling on TV when the phone rang. On the other end of the line was Washburne, calling with the offer for Sherritt.

Two days later, the Canadian mining company announced that it had signed a preliminary term of commitment with Gillon. The company said the US State Department had no objections to the talks.

It remains unclear whether Ottawa will support a U.S. investor taking control of Sherritt. Canada adopted a new policy in 2024 that makes it more difficult for foreign companies to acquire critical mineral assets.

For Ben Rowswell, former Canadian ambassador to Venezuela, the attempt by an investor close to Trump to take over Sherritt in Cuba is an example of what became known as the “Donroe Doctrine”, the American president’s version of the traditional quest for US hegemony in the hemisphere.

The latest move offers “another window into the new character of the U.S. relationship with the region, which is becoming that of an extractive predator” that uses its power against all countries, said Rowswell, now a consultant at strategy firm Catalyze4.

Prime Minister Mark Carney’s government may hesitate to block the purchase of Sherritt by an American investor so as not to disrupt negotiations to renew the free trade agreement with the United States, said Rowswell, adding that, in his view, Canada should defend the company against American sanctions.

A spokesperson for Industry Canada said the government welcomes foreign investment that benefits the country’s economy, but did not comment on specific deals.

Sherritt is not the only foreigner with mining operations in Cuba: Singapore-based commodities trading giant Trafigura has a lead and zinc mine on the island in a joint venture with the state. The company claims to comply with all applicable sanctions and maintain regular dialogue with authorities.

Even with the potential agreement with Gillon, Sherritt’s situation remains fragile. Three directors resigned, leaving just Hancock and another director. The CFO and external audit also left the company this month. The shares became a penny stock, with a market value close to C$80 million. Without the supply of nickel and cobalt from Cuba, the available stock at the Alberta refinery is expected to run out in mid-June, the mining company said.

“A lot still needs to happen for the full value to be unlocked,” said Hancock, highlighting that securing inputs such as fuel and sulfur will also be crucial to realizing Sherritt’s potential. But, he added, “the U.S. government’s stance on this deal opens up a much broader universe of financing.”

The Fort Saskatchewan refinery is one of the few nickel processing plants in North America. As governments and manufacturers rush to set up supply chains for critical minerals outside of China, the unit is gaining strategic importance, according to Northstream’s Gavarkovs.

For Hancock, a former Glencore engineer, the months since taking over as interim CEO have been full of “totally unexpected twists and turns”. If Gillon’s proposal goes forward, any detente between the Trump administration and Cuba would likely improve the Washburne family’s return on investment, he added.

Gillon “knows the business very well and the value it sees ahead”, he said. “This agreement signals that they believe Sherritt has a very promising future when the situation in Cuba normalizes.”

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