By Kosaku Narioka

Sumitomo Metal Mining Co. shares fell sharply Tuesday morning after the Japanese metal producer discontinued a project that was the centerpiece of its nickel strategy.

Shares in the company were recently 9.2% lower at 5,330 yen ($41.60) after falling as much as 9.5% earlier.

Sumitomo Metal said Monday after market close that it decided to discontinue the feasibility study on the construction of a nickel refinery in Indonesia.

Nickel is used for electronic and battery materials in a wide range of industries including aerospace and semiconductors.

Sumitomo Metal said it had been conducting a feasibility study on the Pomalaa nickel refinery project with Vale Indonesia, but procedures to obtain permits and talks with Vale Indonesia were delayed due partly to the Covid-19 pandemic.

Sumitomo Metal said the Pomalaa project was the centerpiece of its strategy to boost nickel production and that it would continue its efforts to secure nickel resources to ensure a stable supply of its products.

Sumitomo Metal shares had risen in recent weeks thanks to the prospects of higher metal prices after Russia's invasion of Ukraine. The stock had risen 35% in the year through Monday.

Metal peer Mitsui Mining & Smelting Co.'s shares were recently 3.8% lower. The Nikkei Stock Average was 0.4% higher.


Write to Kosaku Narioka at kosaku.narioka@wsj.com


(END) Dow Jones Newswires

04-25-22 2214ET