Page 158 - RusRPTNov20

in MMK’s view.
· MMK expects Russian rouble steel prices to recover within 1-3
months; the domestic premium might increase to USD 50/t in th
enext 1-3 months, with upside for a further increase in 2021.
· Sales are to increase to 3mnt in 4Q20, close to 4Q20 production, as
the company has already sold additional stocks in 3Q20 and is not
going to sell any more.
· The company sees 4Q20 capex at USD 260mn, so its FY20 forecast
is USD 730mn. The 2021 capex guidance was increased to USD 1bn due to the delay in the coke battery project and the respective shift in capital expenditures from 2020 to 2021.
· The group remains committed to its dividend policy to pay 100% of FCFE, as ND/EBITDA remained below target (-0.03x vs 1.0x).
· In 4Q20, NWC is to increase from the current 11% of revenues to
14%, due to the accumulation of winter stocks of steel scrap and also because of an increase in export sales, which requires additional working capital.
● Other
Norilsk Nickel​ released 3Q20 operating results. The results showed no surprises, ​while the company confirmed production guidance for 2020. Nickel production rose 8% q/q to 60kt, attributed to the gradual ramp-up of nickel refinery at Kola MMC and production of nickel concentrate for sales Copper output fell by 5% q/q to 119kt due primarily to scheduled repairs at Talnakh concentrator in Polar division Palladium output rose by 8% q/q to 783koz, while platinum output rose by 10% q/q to 190koz. The increase of PGM output was mainly driven by the start of processing of chlorine-leaching residues in-house at Kola Division following the ramp-up of new refining capacities at Kola MMC Taking into account 9M20 operating results, the company reiterated its 2020 production guidance at 225-235kt for nickel, 420-440kt for copper, 2,648-2,777koz for palladium and 611-675koz for platinum (the guidance is for Norilsk Nickel Group excluding Bystrinsky GOK) Bystrinsky GOK production guidance was also maintained at 55-65kt of copper and 220-240koz of gold.
Norilsk Nickel​ fuel spill fines amount to several RUB100,000 ​Fines for fuel spill in Norilsk amounted to several 100k rubles. Interfax reported, citing the head of Rosprirodnadzor, Svetlana Radionova, who emphasized that the fine payment and damage compensation should not be confused. Total fines for GMKN for the fuel spill in Norilsk amounted to several hundred thousand rubles, while the estimated damage compensation amount is much higher c$1.9bn (Rb148bn). Radionova noted that the company's annual dividends are twice as large as the damage amount (not a fine), thus Rosprirodnadzor never sought to ruin investors and that the Department’s aim is for a rich and strong industry in Russia taking into account the interests of citizens. In Radionova’s view, if the accident had occurred in another country, the company would have
158 ​RUSSIA Country Report​ November 2020 www.intellinews.com