Page 158 - RusRPTMar21

outlook on platinum, given the 1.0mnoz surplus in 2021 (14%).
Raise earnings higher metal prices. Given the positive surprises from copper and rhodium prices and a weaker RUB$in 2H20, we increase 2021F EBITDA 16%.
We leave our 12-month Target Price unchanged, as we reduce our 2021F Target EV/EBITDA to reflect lower PGM peer valuations (Figure 3). Even after payment of the environmental claim (see Morning Comment – 8 February 2021), MET rise (see our Proposed MET increase for base metals and iron ore) and capex increase, we still expect an 8% FCFE yield. We believe that robust 1H21 earnings, supported by a metals prices rise, might be the next catalyst for the name.
Norilsk Nickel is to shut down its copper smelting on ESG concerns. Activities at the Kola MMC in Monchegorsk will stop in April 2021. That company noted that this shutdown, coupled with the nickel smelter being stopped at the end of 2020, would reduce sulphur dioxide emissions at Kola 85% by the end of 2021 vs. 2015. Norilsk Nickel had decided earlier to close its Monchegorsk capacity in 2021, but it was unclear precisely when this would happen. Therefore, the closure of the copper refinery at Monchegorsk is in line with the company’s previous plans and will help it to reach its target of an 85% reduction in SO2 emissions at Kola (for details, see our Norilsk Nickel - Capital Markets Day 2020, of 2 December 2020).
Norilsk Nickel has partially suspended operations of the Oktyabrsky and Taimyrsky mines due to a flood, Norilsk Nickel said in a statement on Wednesday. On February 12, the company registered an inflow of ground waters following mining works at the Oktyabrsky mine at the depth of 350 meters. “Due to a higher water inflow to the pumping facilities of the Oktyabrsky mine, and having the safety techniques and regulations and the current legislation in mind, the company decided to suspend work of the mine partially and temporarily until the flood subsides. Works on liquidation of the flood have been started,” the statement read.
The Chinese co-owner of the Bystrinsky project Highland Fund has the option to sell its 13.3% share for USD 428mn to Norilsk Nickel. Highland Fund has a right to exercise this option until the end of 2021, and Kommersant notes that the option might be an insurance in case the project IPO does not happen. Since there is no final decision by the Chinese shareholder, we do not expect this news to affect the company’s FCFE in 2021. Moreover, given that the implied EV/EBITDA is below 5x for 2021F for Bystrinsky, which is undemanding, we do not expect this option to be exercised.
Norilsk Nickel reported an accident at its Norilsk Concentrator with three people died while five sustained injuries on February 22. The company is
158 RUSSIA Country Report March 2021 www.intellinews.com