Page 184 - RusRPTApr21

$2bn would come on top of the previously arranged $1.1bn that the company is to invest in 2021-35. Assuming 2021-35 as the timing for these investments, we see an additional $133mn/a of social expenses over this period, or some 27% of the company’s FY20 social costs, 1% of EBITDA and 3% from net income. We also note, that, given the company’s plan to implement the programme more intensively in 2021- 24, costs are likely to be distributed unevenly, with the next four years seeing more than thereafter. Therefore, the news is slightly negative, in our view.
Norilsk Nickel expects CapEx guidance will not be exceeded in 2021. Interfax reported, citing Sergey Dubovitsky, Senior Vice President of Norilsk Nickel. Norilsk Nickel will not seek to maximize the 2021 production program at any cost and the company’s priority remains safety. The company expects production at the Oktyabrsky mine to be gradually restored in the second half of April-May, and at the Taimyrsky mine in June. Norilsk Nickel does not expect the flooding or repairs at the Norilsk Concentrator to mean CapEx guidance is exceeded.
Norilsk Nickel shareholders agreed on a spin-off of GRK Bystrinskoye. Norilsk Nickel principal shareholders Interros, UC Rusal and Crispian are proposing to the BoD to consider a spin-off of GRK Bystrinskoe and to allocate Norilsk Nickel’s entire stake in Bystrinsky project among all Norilsk Nickel shareholders. Norilsk Nickel holds 50.01% of shares in the Bystrinsky project. The spin-off is expected to take up to c2 years. Meanwhile, the Nornickel President, Vladimir Potanin, said they welcome the decision of the major shareholders to support the spin-off.
Norilsk Nickel flooded mines will be restored to full capacity within 3-4 months. Norilsk Nickel reported that Oktyabrsky mine will gradually ramp-up in the second half of April/May, while Taimyrsky mine is scheduled to resume mining in early June, with full recovery expected to take approximately one month. According to the company’s current base case estimates, metal production is expected to fall short of 2021e production guidance – nickel will miss by c35kt, copper by c65kt and PGMs by 22t (c710koz). However, the company does not completely rule out an additional delay in the implementation of this plan and notes downside risk to the base scenario provided.
TMK is participating in negotiations about the sale of Chelpipe, RBC reported yesterday. According to the article, TMK might be interested in acquiring Chelpipe. The potential deal could close in March-April, according to the newswire. So far, there has been no official confirmation of TMK’s intent to buy Chelpipe from either TMK or Chelpipe, as both companies declined to comment, according to RBC. The news follows reports last year that Chelpipe was engaged in negotiations with ZTZ, a private pipe producer, and that the two companies had even entered into an agreement. However, ZTZ recently commented that it intended to focus on organic growth and its own OCTG production construction rather than acquisitions, according to RBC. Our View:
184 RUSSIA Country Report April 2021 www.intellinews.com