Page 144 - RusRPTJul21

and polishers have fully adopted, and are able to process, all available volumes of rough diamonds. End-demand for diamond jewelry remains robust in all key regions. For 4M21, jewelry sales exceeded pre-COVID levels of 2019 by 30% in the US, and by 10% in China.
● Steel
Novolipetsk Mining Kombinat (NLMK) announced that it is planning to expand its mining division. The company plans to spend RUB 250bn ($3.4bn) to add an additional 10mntpa of iron ore concentrate, 9mntpa of DR (direct reduction) pellets and 2.5mntpa of HBI (hot briquetted iron). To facilitate the expansion of Stoylensky GOK, NLMK’s main iron ore asset, the company signed a Memorandum of Intent with the Belgorod Region and the Russian Ministry of Industry and Trade. Interfax reported that the expansion of NLMK’s mining division will be supplemented by greater crude steel production, but the company confirmed that these plans have yet to be approved by its BoD. We consider the expansion of NLMK’s most profitable business (2020 EBITDA margin of 76%) as a logical step in increasing the potential for enhancing shareholder value
● Other
Norilsk Nickel inventory sale may compensate up to 70% of revenue drop. Norilsk Nickel expects to offset up to 60-70% of lost revenue from flooding at Oktyabrsky and Taimyrsky mines by selling reserves, Norilsk head of investment relations, Mikhail Borovikov. These reserves of nickel and palladium, which were unclaimed due to interruptions during the pandemic, had been accumulated in 2020, Borovikov said. In case output falls by 10% for nickel and 15-20% for PGMs, the drop in revenue will be much less noticeable.
According to Reuters, UC Rusal sees the investment for modernising four of its plants at around $5bn. The total $5bn of project capex is close to our estimation for the construction, including anode plants, and also to the figure, that was previously provided by Kommersant (see our UC Rusal – plans for environmental upgrades at four smelters create capex upside risk, of 15 April and the Morning Comment of 17 May). Therefore, we treat the news as neutral.
9.2.12 Transport corporate news
Russian Railways (RZhD) Deputy CEO Alexei Shilo said the company expects to exceed 2019 railcar load volumes on a YTD basis in July (i.e. 7m21 volumes should exceed 7m19 volumes).
Shilo also reiterated RZhD's new guidance for volume growth of 3.3% y/y in 2021, a 0.5% increase compared to the 2019 level (the guidance
144 RUSSIA Country Report July 2021 www.intellinews.com