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Norilsk Nickel

Norilsk Sinks in Nickel Bear Market Wiping Out 46% Gain – by Halia Pavliva (Bloomberg News – October 8, 2014)

http://www.bloomberg.com/

OAO GMK Norilsk Nickel (NILSY), the best performer earlier this year among Russian shares traded in the U.S., sank to a six-month low on concern demand will weaken amid expectations for a slowdown in global economic growth.

American depositary receipts of the world’s largest nickel producer dropped 1.6 percent to $17.23 yesterday as the metal, used to prevent corrosion in stainless steel, slumped the most in two weeks. The stock has lost 20 percent since July, reversing a five-month rally that made it stand out as the benchmark Micex Index tumbled after President Vladimir Putin’s annexation of Crimea in March.

Nickel entered a bear market last month amid a slowdown in China, the largest metals consumer, and as stockpiles ballooned to a record. The International Monetary Fund on Oct. 7 cut its forecast for global growth, sparking concern that demand will ebb. Norilsk skirted the selloff in Russian equities triggered by sanctions over the nation’s role in the Ukraine war, surging 46 percent to an almost three-year high in July after months of nickel shortages.

“The company, which wasn’t affected by the sanctions, is now reacting to investors’ concern over economic growth, particularly in China, because that signals less demand for the metal,” Sergey Donskoy, an analyst at Societe Generale SA in Moscow, said by phone yesterday.

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Russian business fears return to isolation during ‘evil empire’ – by Elizabeth Piper and Timothy Heritage (Reuters U.K. – September 26, 2014)

http://uk.reuters.com/

(Reuters) – Russian businessmen are backing Vladimir Putin over Ukraine but fear the country is being forced down a path toward less democracy, more central control of the economy and isolation that recalls the Soviet “evil empire”.

Like many other business leaders, Vladimir Potanin, one of Russia’s richest men, says Western sanctions and attempts to force the president to change policy risk opening a rift between Moscow and the West that will be difficult to repair.

“What is happening now, namely the isolation of our country from contacts with Europe, America and several other countries, causes real regret,” Potanin, a metals magnate who built his empire soon after the Soviet Union collapsed in 1991, said in an interview at the Reuters Russia Investment summit.

“Because, in a sense, we are returning to the days when Soviet people were regarded as coming from ‘the evil empire’ and now people are starting to place this cloak on Russians’ shoulders again,” he said, using the phrase coined by former U.S. President Ronald Reagan during the Cold War.

There is broad agreement in business circles that the Western sanctions, imposed on Moscow over its policy on Ukraine, have had the opposite effect to the one intended. Instead of undermining Putin, the sanctions have – at least so far – united the business and political elite.

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An embargo on Russia’s Norilsk Nickel would hurt West -French rival – by Gus Trompiz (Reuters India – July 30, 2014)

http://in.reuters.com/

PARIS, July 30 (Reuters) – An embargo against Norilsk Nickel as part of Western sanctions against Russia would hurt nickel users in Europe and the United States rather than Norilsk itself, the head of French mining group Eramet said.

Norilsk, the world’s largest producer of the stainless steel ingredient, has not been targeted so far by western measures aimed at punishing Russia for its support of pro-Moscow rebels in neighbouring Ukraine.

“Nobody expects sanctions against Russia and Norilsk would affect Norilsk’s production since it would sell to China if it couldn’t sell elsewhere,” Eramet Chief Executive Patrick Buffet said during a presentation of Eramet’s first-half results on Wednesday.

“It’s unlikely an embargo by Europe would materialise, because it would be shooting itself in the foot, since Norilsk could ship its production to Asia, creating a shortage in Europe and oversupply in Asia. The consequence would be a jump in physical premiums in Europe and a discount in Asia,” he added.

The most likely scenario for western restrictions against Norilsk would be a U.S.-only embargo, which would push up nickel premiums there but not hit the world market, Buffet added. Nickel prices have already rallied this year after a ban by Indonesia on nickel ore exports curbed supply to China.

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[Norilsk Russia and Nickel Mining] Life behind closed doors in the Arctic is…..fun! – by Kate Baklitskaya (Siberian Times – April 22 2014)

http://siberiantimes.com/home/

Norilsk is home to the world biggest mining and metallurgy complex, and is shut off from the world in more ways than one.

From deep in Soviet times, it was ‘closed’ to outsiders, and currently remains exceptionally hard to visit for foreigners. It appears on lists of the top ten most polluted cities in the world, and yet has no road or rail connections to the ‘mainland’, as the rest of Russia is known here, and the sea port Dudinka, which is 100 km from Norilsk is closed for nine months a year. Yet, intriguingly, the 177,000 people living in Norilsk – which accounts for two per cent of Russia’s entire GDP – seem more contented than many others in Russia.

On a Saturday night, local photographer Nadezhda Rimskaya, 32, goes to OverTime bar to see the local rockabilly band. Nadezhda graduated from a college in St Petersburg but decided to return home and has been working here for the last four years. The concert finishes after midnight and the group of young people decide to go for a late dinner.

Luckily there are places where the kitchen remains open after midnight – for example Maxim pub. Indeed, Moscow-level restaurants and night clubs, bars and coffee shops, are increasing in Norilsk powered by the high demand, surprising as this may seem.

‘Norilsk misses just two things – oxygen and the internet’, says Nadezhda on her night out, referring to the general lack of oxygen in the air in the north and the absence of the high speed internet in the city. Everything else is fine here and in many ways much better than in many Russian cities. I’m honestly surprised when I hear people say that Norilsk is ‘horrible’. That’s just a misinformed stereotype.’

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3 Reasons Why Palladium Prices Should Continue To Surge – by Royston Wild (Forbes Magazine – April 15, 2014)

http://www.forbes.com/

A confluence of factors have propelled palladium to multi-year peaks in the past few days. Recent highs above $800 per ounce representing the highest level since March 2011, and for some a march towards 2001′s all-time high of $1,090 is considered a very real possibility.

I am amongst those who reckon that palladium is poised to enjoy further solid price appreciation, and here I outline the three major factors which should continue to drive the metal skywards.

Russian shipments on the wane

The escalating political crisis in Ukraine has been a significant driver of palladium’s ascent in recent weeks, with Russia’s alleged involvement in the conflict prompting the US and the European Union to discuss imposing heavy economic sanctions on the country.

Norilsk Nickel is the world’s largest producer of the precious metal, and last year the company produced 2.58 million ounces of the material, or about 40% of total global supply. So the possibility of trade restrictions being placed on Russia could be catastrophic for metal supplies.

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Stars Aligned for Nickel Bull Market – by Tim Maverick (Wall Street Daily – March 27, 2014)

http://www.wallstreetdaily.com/

Russian President Vladimir Putin’s actions have certainly stirred the pot in the energy market, as our Investment Director, Karim Rahemtulla, recently pointed out. And now, the ripples have spread far beyond the energy market to other commodity markets.

You see, the threat of Western sanctions against Russia has put renewed focus on a base metal that’s been in the doldrums for years… nickel.

That’s because the world’s largest producer of the metal, which is used to make stainless steel and nonferrous alloys, happens to be Mother Russia’s Norilsk Nickel (NILSY). NILSY mines a whopping 17% of the world’s nickel each year. Sanctions against such a huge source of nickel would indeed be a big deal, and share prices are reacting accordingly.

Nickel is suddenly in bull market mode, and prices recently hit their highest level since April at $16,230 per metric ton on the London Metals Exchange (LME). That represents a gain of more than 20% since nickel’s low on January 9, at $13,334 per ton, and meets the technical definition of a bull market.

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Norilsk Nickel Turns its Attention to the Environment and Tier 1 Assets – by Vladislav Vorotnikov (Engineering and Mining Journal – February 2014)

http://www.e-mj.com/

Something happened on the road to the Voronezh project; environmental activists backed by Putin convinced Russian nickel miners to clean up their act

MMC Norilsk Nickel, the largest mining company in Russia and one of the world’s largest nonferrous base-metal miners, faces very serious pressure from the community and Russian environmental protection organizations. They claim that the company’s activity harms the health of surrounding citizens and nature. These pressures combined with weaker prices for metals are raising future performance standards for the company.

In terms of total world production, Norilsk Nickel mines palladium (41%), nickel (17%), platinum (11%), cobalt (10%, concentrate) and copper (2%). Domestically, the company accounts for all of the platinum production, most of the nickel (96%), cobalt (95%) and a majority of the copper (55%). As an industrial leader, it plays a crucial role in the Russian economy, accounting for about 4.3% of all Russian exports, 1.9% of GDP, 2.8% of total industrial output and 27.9% of output of the non-ferrous metallurgy industry.

Recently Norilsk Nickel updated its development strategy, which, as confirmed by top management, dramatically changes its course for the coming years. The primary focus of development in accordance with the new plan will be on large assets, possibly including Voronezh, the last large non-developed nickel deposit in Europe.

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Toronto miner still jumping into Ring of Fire – by Lisa Wright (Toronto Star – November 22, 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.

Noront Resources CEO says company will be the first to open mine in region.

Toronto-based Noront Resources Ltd. still plans to jump into the world-class Ring of Fire, despite a U.S. firm’s decision to abandon its massive mine project in the Northern Ontario region.

“We’re the most advanced project in the area,” Noront chief executive Alan Coutts said in an interview Thursday.

Despite a brutal downturn in the metals market that has rocked the mining industry this year, the exploration firm is on track to develop its $700 million Eagle’s Nest deposit of high-grade nickel, copper, platinum and palladium, he said.

And Cliffs Natural Resources Inc.’s decision this week to abandon its nearby chromite development has no impact on the plans the Toronto miner has for its coveted base metals property a few kilometers away, he said.

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Norilsk Hires Barclays for International Assets Sale: Sources – by Gillian Tan (Wall Street Journal – October 14, 2013)

http://online.wsj.com/home-page

SYDNEY–Russia’s OAO Norilsk Nickel (GMKN.RS), the world’s largest nickel and palladium producer, has hired Barclays PLC (BARC.LN) to sell the majority of its international assets, including mines in South Africa and Botswana, people familiar with the matter said.

The U.K. bank has sent out information to prospective buyers for assets including Norilsk’s 50% stake in the Nkomati joint venture in South Africa. African Rainbow Minerals (ARI.JO) owns the remaining interest and has the right to match any offer for the stake, one of the people said.

The company’s 85% stake in Tati Nickel, which it co-owns with the Botswana government, is also for sale. Both assets were acquired when Norilsk outbid Xstrata PLC to acquire Canada’s LionOre Mining International Ltd. for 6.3 billion Canadian dollars (US$6.1 billion) in 2007.

Another asset on the block is the Norilsk Nickel Harjavalta refinery in Finland, which produces 50,000 metric tons of nickel a year, according to its website.

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No plans to step down for Norilsk’s billionaire CEO – by Clara Ferreira-Marques and Douglas Busvine (Reuters U.S. – October 6, 2013)

http://www.reuters.com/

LONDON – (Reuters) – When he took the helm of Norilsk Nickel (GMKN.MM) last December as part of a deal that ended a long-running shareholder battle, Russian billionaire Vladimir Potanin hinted he saw himself in the job for roughly two years.

Almost a year on, Potanin is clearly relishing his role at the center of a major turnaround and indicates he has no plans to stand down as chief executive of the world’s largest producer of nickel and palladium. “I don’t like deadlines,” the 52-year-old Potanin told Reuters over tea in an upmarket London hotel late on Friday after a long day spent wooing investors.

His departure could be years away as he develops the Norilsk management into a world-class team, he said. “For a rich and reasonably successful guy, it is impossible not to enjoy your job, otherwise why would you spend so much time and effort doing it? I am a great fan of Norilsk and I like this kind of challenge.”

Potanin, whose more than $14 billion fortune began in banking, has long been a major shareholder in Norilsk, securing stock at a bargain-basement price in the loans-for-shares privatizations that followed the collapse of the Soviet Union and spawned a new oligarch elite.

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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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UPDATE 1-Russia’s Norilsk to slim down, focus on top assets – by Polina Devitt (Reuters India – September 12, 2013)

http://in.reuters.com/

MOSCOW, Sept 12 (Reuters) – Russia’s Norilsk Nickel , the world’s biggest nickel producer, said it plans to slim down and focus on its top assets, joining other big mining companies in shedding businesses in the face of weak metals prices.

The company, partially owned by Russian tycoon Vladimir Potanin and aluminium giant Rusal, is having to cope with a more than 20 percent plunge in nickel prices this year, although it has remained profitable. Weak metals demand however is making it difficult to sell businesses.

Under its new strategy announced on Thursday Norilsk stuck to its plan to sell off assets in Africa and Australia, despite the failure to close any deals in recent months.

Deputy chief executive Pavel Fedorov said the company would focus on so-called “Tier 1” assets – high quality projects with large scale – with current or potential annual revenue of more than $1 billion, EBITDA margins of more than 40 percent and 20 years of viable reserves.

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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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Norilsk sees Indonesia ore ban supporting nickel price – by Fergus Jensen (Reuters U.S. – August 1, 2013)

http://www.reuters.com/

JAKARTA – Aug 1 (Reuters) – Nickel prices could recover next year, when Indonesia brings in a planned ban on unprocessed ore exports, said executives from Russia’s Norilsk Nickel, the world’s largest producer of the metal.

Indonesia is the world’s top exporter of nickel laterite ore, which is mostly shipped to China to be used as a cheap substitute for nickel in stainless steel.

A strictly enforced ban on exports of ore would support demand for refined nickel, said Pavel Fedorov, deputy chief executive of Norilsk Nickel, who met government and industry officials in Jakarta to assess how the policy would be implemented.

“We received high-level assurances that there is a game plan in place that would ensure restriction on export of ore would be in place by January and would be subject to very strict rules and regulations,” added Fedorov, who did not name the Indonesian officials he met.

Uncertainty over the policy was hindering investment and disrupting the nickel market, much of which believed the 2014 ban would be delayed “or somehow fudged”, he added.

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Norilsk to Focus on Arctic Circle Mines as CEO Builds Team (2) – by Yuliya Fedorinova (Bloomberg News – June 28, 2013)

 http://www.businessweek.com/

OAO GMK Norilsk Nickel (GMKN), the largest nickel and palladium producer, plans to focus on developing its operations in northern Russia over international assets after installing a new chief executive officer and management team.

“We will be looking at opportunities to optimize our portfolio of assets, including our international operations, with a key strategic focus on the sustainable increase of the firm’s return on capital,” Norilsk Deputy CEO Pavel Fedorov, head of strategy and business development, said in an interview in Moscow. “Enhancing the efficiency and capitalization of our key Polar Division would be at the heart of the new strategy.”

The division has seven mines north of the Arctic Circle, producing nickel, copper, platinum, palladium, cobalt and gold above the 69th parallel. Plants processing ore from these mines achieve an extraction rate of 83 percent of nickel from each ton of ore after the first phase of enrichment, compared with 70 percent and below for Norilsk’s assets in Africa and Australia, according to its annual report.

Billionaire Vladimir Potanin replaced Vladimir Strzhalkovsky as CEO at the end of 2012 as part of a truce to end a conflict between Norilsk shareholders Interros and United Co. Rusal over how the company was run. In April, Potanin hired Fedorov, a former mergers-and-acquisitions banker, for the 12-member management board among nine newly appointed executives.

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