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NEWS RELEASE: Norilsk Nickel Unveils New Strategy Focused on Tier I Assets and Higher Returns

October 04, 2013 09:05 AM Eastern Daylight Time

MOSCOW–(BUSINESS WIRE)--MMC Norilsk Nickel (hereinafter, Norilsk Nickel or the Company), the largest global nickel and palladium producer, today announced further details of its new strategy at MMC Norilsk Nickel’s “Unveiling New Strategy” event held in London.

Highlights

  • Capture full potential of MMC Norilsk Nickel’s unique resource base in Russia
  • Focus on Tier 1 assets to deliver sustainably high return on capital
  • Focus on capital discipline and introduction of return on investments as key metric for the organization
  • Increased focus of existing portfolio on copper and PGMs
  • Prioritize Polar Division Upstream assets, with a plan to:
    -Maximize high-margin production utilizing existing infrastructure
    -Develop the greenfield Skalisty mine, with a potential 2.4Mtpa ore capacity
    -Upgrade of the Talnakh infrastructure into a world class concentrator

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Two of Canada’s more isolated mines continue to impress: Raglan and Eleonore – by Russell Noble (Canadian Mining Journal – October 2013)

Russell Noble is the editor for the Canadian Mining Journal, Canada’s first mining publication.

Nunavik and Quebec’s Raglan Mine and Éléonore, operated by Glencore and Goldcorp respectively, are two of the larger and more successful mining operations in the country, but their locations are about as unfamiliar to most people as the northern landscapes where they are located.

In other words, most people don’t have a clue where they are on the map, let alone what the surroundings are like that far north. Both mines are indeed, remote and somewhat isolated, but when it comes to mineral deposits, Raglan Mine and Éléonore are at the forefront and envy of the mining community across the country.

In fact, the world is also keeping watch as Glencore and Goldcorp continue to move towards making their Canadian operations two of the more productive mines on the globe.

Starting at the farthest point north at the Raglan Mine, which is located in Nunavik approximately 1800 km northwest of Montreal or, about the same as Cuba is to the south, is near Deception Bay on the Hudson Straight and is linked by all-weather roads to an airstrip at Donaldson.

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Royal Nickel has high hopes for Dumont mine – by Robert Gibbens (Montreal Gazette – October 1, 2013)

http://www.montrealgazette.com/index.html

MONTREAL — Resource companies keep an eagle eye on the economic cycle and Royal Nickel Corp. believes its $1.2 billion U.S. Dumont nickel mine in northwestern Quebec will start up in 2016 as metal prices swing higher.

Base metals, including nickel — the key ingredient in stainless steel — mirror the economic cycle, with their price charts giving early warning of bad news to come.

This year they’ve been in the dumps, with nickel among the most volatile. Analysts blame overcapacity stemming from slower Chinese growth, the European debt crisis and North America’s tepid recovery from the 2008-09 recession.

But Royal, led by a team of former Inco (now owned by Brazil’s Vale SA) executives, has begun negotiating partnerships, offtake agreements and debt and equity financing for its Dumont open-pit nickel mine and mill near Amos, in the Abitibi region. It could rival Vale’s big Voisey’s Bay (60,000 tonnes a year) mine in Labrador when it hits full stride in 2020.

“We’ve been planning this for more than three years and we see a low-cost operation providing more than 500 permanent jobs, a mine life of at least 33 years and able to survive any future global economic cycles,” Tyler Mitchelson, Royal’s CEO, said in an interview.

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PRESS RELEASE: Nickel An Essential Material To Address Sustainability Challenges

BRUSSELS, Belgium – 25 September 2013 – The Nickel Institute has today released a new report ‘Nickel in Tomorrow’s World: Tackling Global Challenges’ which highlights how nickel contributes to technologies for a more sustainable society and economy, one which meets the needs of a growing global population.

Nickel’s versatility and robustness mean that it is an ideal material to provide solutions for energy, transport, food and clean water as well as meeting other key sustainability challenges.

Nickel metal is tough, malleable and highly-resistant to corrosion. Nickel containing materials such as stainless steel have a long lifespan and require less maintenance than many alternative materials. Nickel is light and can reduce the overall weight of products, reducing the energy required for their production and operation. In addition, nickel retains its value at end-of-life, making it well-suited for recycling and reducing the wastestream.

Tim Aiken, Nickel Institute President said, “Some of society’s greatest challenges include reducing energy consumption and assuring access to safe food, clean water and advanced healthcare for citizens. The Nickel Institute’s latest publication is part of our ongoing commitment to educate and inform our stakeholders on the essential role nickel plays in industrial applications to address these grand challenges.”

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Inuit employment in Nunavik mines still weak – by Sarah Rogers (Nunatsiaq-on-line.ca – September 27, 2013)

http://www.nunatsiaqonline.ca/

Only 175 Inuit work at the Raglan nickel mine

Nunavik Inuit still make up only 13 per cent of the work force at the region’s only fully operational mine. At the Raglan nickel mine complex, in operation since 1998, only 175 of 1,292 workers are Inuit — well under the 20 per cent initially targeted for the region.

And those numbers haven’t changed much since 2012. “The data for Xstrata mine site is very similar to last year,” said Margaret Gauvin, director of the Kativik Regional Government’s sustainable employment department, during a regional meeting earlier this morning.

“Contract companies have a harder time getting Inuit workers, and that brings the percentage down.” A number of companies like Katinniq Transport, Iglu Construction and Nunavik Construction are contracted to work at the Xstrata site. But increasing Inuit employment in the mining sector remains a priority for the KRG, which wants to encourage students to stay in school or return to school in areas related to mining, Gauvin said.

More than $10 million over the next two years is targeted at mine training in Nunavik — to respond to a growing number of mining projects in development and to address fears among Nunavimmiut that they are being left out of the process.

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Norilsk Sees Nickel Surplus Shrinking Next Year on Idled Plants – by Yuliya Fedorinova & Marina Sysoyeva (Bloomberg News – September 27, 2013)

http://www.bloomberg.com/

OAO GMK Norilsk Nickel, the world’s largest producer of the metal, urged producers to start idling unprofitable operations to fight a surplus that has damped prices and caused losses.

Consecutive quarters of losses should push companies to cut output, which may narrow the nickel surplus 30 percent to 70,000 metric tons in 2014 from 100,000 tons this year, according to Anton Berlin, marketing director at ZAO NormetImpex, a unit of Norilsk Nickel.

Nickel, used in stainless steel, tumbled into a bear market in May and is set for a third yearly loss, as demand waned and China increased output of a substitute derived from lower-grade ores. Additions to Chinese nickel pig iron capacity outstrip closures, creating a third consecutive annual surplus in 2013, according to a Deutsche Bank AG report in August.

“Unfortunately, we don’t see significant changes on the nickel market yet compared with what we had at the start of the year,” Berlin said in an interview Sept. 25. “From 35 to 40 percent of producers are still loss-making and the gap between supply and demand remains high.” Nickel traded at about $13,887 a ton on the London Metal Exchange by 10:35 a.m. local time, down 19 percent this year, making it the worst performing industrial metal.

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Innovators work to diversify the U.P. economy – by Kathleen Lavey (Detroit Free Press – September 22, 2013)

http://www.freep.com/

Gannett Michigan – Seven hundred feet below the surface of the earth, John Mason drives a truck through the heart of Eagle Mine, the tires crunching on irregular pieces of rock at the bottom of the tunnel.

He points to a section of the rock that’s a slightly different color than the rest. It gleams a little in the artificial light from the lamp on his hard hat.

“There,” Mason says, “is the ore body. Right there.” Four percent copper. Five percent nickel. An estimated 550 million pounds of usable metal in a mine near Marquette.

That’s no match for the purity of the copper hewn from the U.P.’s ancient rock formations during its 19th- and 20th- Century mining boom. But these days, getting it out is worth an investment of more than $1 billion and an effort that will keep a crew of up to 220 miners busy for at least eight years.

The new mine, scheduled to begin extracting ore late next year, is the next chapter in the Upper Peninsula’s long history of making a living from natural resources.

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Vale’s Manitoba Operations has reached 95 per cent of cost savings goal, Lovro Paulic says – by John Barker (Thompson Citizen – September 18, 2013)

The Thompson Citizen, which was established in June 1960, covers the City of Thompson and Nickel Belt Region of Northern Manitoba. The city has a population of about 13,500 residents while the regional population is more than 40,000. editor@thompsoncitizen.net

But smelter and refinery “base case” is still to close sometime in 2015

Vale, which is trying to find $100 million in cost savings at its Manitoba Operations in Thompson, has achieved 95 per cent of that goal over the last year – a cost savings of $95 million with $5 million still to go, vice-president Lovro Paulic told the Thompson Chamber of Commerce Sept. 11.

Paulic said $60 million was saved last year and $35 million has been saved so far this year. Ninety per cent of the money was saved between September 2012 and last April, while anther five per cent has been saved since then. That leaves another five per cent to go to reach the $100 million target.

The result of the collective cost-savings effort across the operation was a reprieve for Birchtree Mine from being mothballed again for a second time. Birchtree Mine, which was discovered for its nickel deposit in 1963 and opened in 1968, was previously on care and maintenance for nearly 12 years from 1977 to 1989, although regardless if it is mothballed or not, the current life of mine plan anticipates closure at some point in the next 10 years in any event.

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Lundin Sees Growth in Rio’s Michigan Cast-Off: Corporate Canada – by Gerrit De Vynck (Bloomberg News – September 18, 2013)

http://www.businessweek.com/

Lundin Mining Corp., the best performer among Canadian base-metal companies, is betting that a cast-off from the world’s second-biggest miner will help double output.

Lundin agreed to buy the Eagle nickel and copper mine from Rio Tinto Group for $315 million in June and plans to bring it into production by the end of next year, Chief Executive Officer Paul Conibear said. Eagle is the company’s first new mine after emerging from two aborted takeovers in 2011. Conibear said he wants to boost companywide annual output to about 500,000 metric tons within five years.

“We’re back to basics to re-grow our company,” he said Sept. 13 in a telephone interview. “We’re looking at trying to increase our cash flow through producing facilities.”

Lundin plans to expand while mining companies including Rio and BHP Billiton Ltd. (BHP), the world’s largest, sell assets and reduce spending amid lower prices. Copper has slumped 11 percent this year, nickel dropped 19 percent and zinc is down 11 percent on the London Metal Exchange after growth slowed in China, the world’s largest consumer of metals.

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Vladimir Potanin plans Norilsk Nickel overhaul – by Courtney Weaver and Charles Clover (Financial Times – September 9, 2013)

http://www.ft.com/home/us

Moscow – After years of vicious shareholder infighting, lawsuits and mudslinging, Norilsk Nickel’s oligarch shareholders are scrambling to overhaul its investment strategy and management structure following the steep fall in metals prices.

In an interview, Vladimir Potanin, Norilsk Nickel’s single biggest shareholder with 30 per cent and chief executive, said the company had hired western consultants including McKinsey and BCG to advise the nickel, platinum and palladium producer, which has a market capitalisation of $20.6bn.

According to Mr Potanin, Norilsk has never managed to shake off its Soviet legacy and develop into a 21st century multinational, despite being the world’s largest nickel producer with $12bn in annual revenues and close to $5bn in earnings before interest, tax, depreciation and amortisation.

“To put it simply, the company should become more modern. It’s still working like a Soviet ministry,” Mr Potanin says. “There is a lot of red tape and other things that need to be done away with, given today’s difficult financial markets.”

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Chris Verbiski Turned A Nickel Mine Discovery Into Two Of The Finest Fishing Lodges In The World – by Monte Burke (Forbes Magazine – September 4, 2013)

http://www.forbes.com/

This story appears in the September 23, 2013 issue of Forbes.

The best Atlantic salmon fishing outfit in Labrador–and just possibly in all of North America–was born in the gloaming of Sept. 16, 1993, when two mineral prospectors made the discovery of a lifetime. Chris Verbiski, then 25, a college dropout from Newfoundland with an obsession for rocks, had teamed up with a man named Albert Chislett, then 45, to scour the wild, windswept crags of Labrador for diamonds on behalf of a small mining company.

It had been a rough summer. The two men were sun-blistered and swollen with bug bites. They’d burned through their advance money and were nearly broke. Worse: Only a few weeks remained before the weather shut down prospecting in this harsh, beautiful region on the northeast coast of Canada.

On that early evening, as they headed back to camp in the Inuit community of Nain, they spotted something from their helicopter: a thick stripe of rust-colored rock on a hill above Voisey’s Bay. They hovered over it. Verbiski marked the spot on his survey map. But they were low on fuel and couldn’t descend. It seemed promising–perhaps the indicator of a surge of metals that had been pushed to the earth’s surface a billion years ago. After the fruitless summer that hope was all they had.

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Indonesia plans to soften foreign miners’ divestment rule (Reuters U.S. – September 5, 2013)

http://www.reuters.com/

JAKARTA – (Reuters) – Indonesia plans to relax a rule forcing foreign miners to sell majority stakes and allow those who make downstream investments to keep bigger holdings, a spokesman at the Energy and Mineral Resources Ministry said on Thursday.

Last year, the Indonesian government said foreign companies must reduce their stake in a mine to 49 percent or less within 10 years of production starting, though it has been unclear how the rules will be applied.

The rule was part of a push by Indonesia, which is the world’s top nickel ore, refined tin and thermal coal exporter, to generate more profits and influence in commodities markets.

“For those companies that integrate the upstream and downstream mining activities, they may have that divestment relaxation policy. Instead of divesting 51 percent to be achieved on year 10 of its activity,” ministry spokesman Saleh Abdurrahman said in an email.

“They may divest less than that, depends on the negotiation,” he said, adding there would be a revision to the current government regulation. He gave no timeframe for the change, but new regulations and rules can often get delayed in the lengthy Indonesian legislature system.

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Stephen Harper Arctic tour: Big hopes, bigger challenges – by Tonda MacCharles (Toronto Star – August 24, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Prime Minister Stephen Harper has a strong vision for Canada’s North, but what stands out in his latest trip to the region is the immense challenge of making it a reality.

RAGLAN MINE, QUE. — It was a long way to come for what seems like comparatively little. Prime Minister Stephen Harper arrived in Inuit territory Friday in northern Quebec, 400 kilometres above the tree line, to visit a nickel mine and talk about clean energy.

Or at least the exciting possibility of it. Last year, the Conservative government injected $720,000 into a feasibility test that one day may help resolve the problem of shipping diesel to the North to power many Arctic communities and lower costs of massive mining developments trying to operate far from hydro dams and other sources of energy.

Yet like so much of what the Conservative government leader has tried to do on his eighth trip to the Arctic, what stands out is the immense challenge of it all. Harper has defended his record and called his investments in the North “groundbreaking,” though he has not quite lived up to his early boastful promises of armed icebreakers and brand-new deepwater sea ports for the region.

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Indonesia to see declining revenue from mineral – by Amahl S. Azwar (The Jakarta Post – August 16, 2013)

http://www.thejakartapost.com/

The government is preparing to see a decline in revenue from the mineral sector as the ban on the exports of unprocessed mineral ore is expected to take effect next year, a top official has said.

The restrictions on raw ore exports is aimed at giving added value to the mining products as well as moderating mineral exploitation.

The Energy and Mineral Resources Ministry’s coal and minerals director general, Thamrin Sihite, said on Thursday the country needs to tame the overexploitation of minerals in a bid to protect its resources.

“It is very crucial for us to control the current production to ensure the sector will be sustainable,” he said.

According to the 2009 Mining Law, miners will have to process their mineral ore at their own smelters or at independent smelters as of January 2014, before exporting their mineral production.

Miners that do not have a smelter or are reluctant to process their raw minerals at other smelters will be banned from shipping their unprocessed ore overseas.

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Nunavik mine owes $72 million to creditors; Chinese owners turn project over to Toronto bank – by Jane George (Nunatsiaqonline.ca – August 14, 2013)

http://www.nunatsiaqonline.ca/

Canadian Royalties Ltd. owes $53.6 million to eight Nunavik companies

Canadian Royalties Ltd.‘s Nunavik Nickel mine, which was to be Nunavik’s second operating mine, spinning out minerals for hungry markets abroad, appears so far to have left a trail of debt throughout Nunavik.

The creditors owed a total of nearly $54 million by the Chinese-owned mine include Nunavut Eastern Arctic Shipping, Desgagnés Transarctik Inc., the fuel division of the Fédération des Coopératives du Nouveau-Québec, Laval Fortin Adams, Iglu Construction and Nuvumiut Developments (Ganotec-Nunavumiut and Kiewit-Nunavumiut), which all have links to Nunavik Inuit organizations or individuals.

The construction firm Laval Fortin Adams is owed about $14 million, the largest amount of any of the Nunavik-based companies left holding the bill for work on the mine and docking complex. L’Echo Abitibien says another $16.4 million is owed to Construction Promec de Rouyn-Noranda.

Now the Chinese owners of the mine have turned the cash-strapped Nunavik Nickel mine over to a private merchant bank in Toronto, which will see if there’s hope of salvaging the project, where workers are still stockpiling ore.

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