As coronavirus spreads, Rusal puts brakes on Nornickel`s palladium JV
Mining News Pro - Nornickel is the world`s largest producer of palladium, which has been hit hard by the economic fallout from coronavirus. Prices have plunged 45% since February as investors started dumping the precious metal for cash.
  Zoom:

According to Mining News Pro - Nornickel is the world`s largest producer of palladium, which has been hit hard by the economic fallout from coronavirus. Prices have plunged 45% since February as investors started dumping the precious metal for cash.

Aluminium producer Rusal, which holds 27.8% of Nornickel, has not issued corporate approvals for the miner to participate in the joint venture, Nornickel said in a statement.

"We were ready to support the deal if Nornickel`s share was relevant to its real input in the project," Rusal said, adding that it had asked the two partners to increase Nornickel`s share in the 50-50 venture.

Nornickel and Russian Platinum, backed by Russian businessman Musa Bazhaev, were preparing the project with President Vladimir Putin`s support. It was expected to require $2.8 billion-$3.2 billion by 2024.

"In spite of the current and, we hope, temporary turbulence in the commodity markets, we maintain a very positive view on palladium fundamentals, which should remain strong in a strategic perspective," Sergey Dubovitsky, Nornickel`s vice president for strategy, said in the statement.

"Being a responsible palladium producer and the market leader we intend to develop a long-term operating and commercial partnership with Russian Platinum," he said.

Russian Platinum will proceed with the development of its two Siberian deposits - the Chernogorskoye and the southern part of the Norilsk-1 - on its own, but Nornickel will consider measures to support Russian Platinum`s project and its potential partners, Nornickel said.

Investors from the United Arab Emirates and Saudi Arabia were previously interested in the project.

The support may include an off-take of produce from the two Siberian deposits, Nornickel said, adding that such cooperation should still help to bring more metal to "the market running a structural deficit."

Russian Platinum confirmed it had withdrawn from the project. It plans to maintain a long-term cooperation with Nornickel, it told Reuters.

Nornickel is investing heavily in increasing its output, with capital spending, excluding the palladium project, expected to peak in 2022-2025.

Rusal, the world`s largest aluminium producer outside China, relies on Nornickel`s dividend payments in tough years and has come through a number of shareholder rows on this issue with Vladimir Potanin, Nornickel`s co-owner.

These dividend payments may become more important for Rusal, as it recently posted a quarterly loss and warned the coronavirus could hit global demand for aluminium.


Share the news

In Picture