Page 30 - BNE_magazine_12_2019 dec19

30 I Cover story bne December 2019
Russia weekly nickel prices $ tonne
NorNickel and Russian Platinum is estimated at $15bn on the Taymir peninsula and is set to be launched in 2024. The planned output of the joint venture stands at 7mn tonnes of ore annually, reaching 21mn by 2030. The investment in the first phase in 2019- 2014 is budgeted at $2.8bn-3.2bn.
Reducing the dividend payouts to free up cash for the capex programme would probably reignite one of the longest running corporate disputes between NorNickel CEO and biggest shareholder Vladimir Potanin and Oleg Deripaska, whose Rusal is a significant minority shareholder. Rusal uses its NorNickel payouts to service its debt and has been pushing for even higher dividend payouts. A truce was reached during the last flare-up but the current shareholder accord between the two sides is due to expire at the end of 2022.
Emissions cut by 90%
The main focus of the expanded capex programme is to boost production to meet rising demand, but increasingly important is improving the company’s environmental, social and governance (ESG) goals.
As bne IntelliNews has reported, ESG has shot up the agenda after major investment funds started selling shares
demand and that inventories of metal are also low, which should force prices to rise. The cost of nickel has already been climbing strongly this year, and following Indonesia’s decision to ban nickel exports this summer the trend is anticipated to continue.
Even if dividends are not going to be cut, capex is going up and may rise more than 40% from next year’s target to as much as $4bn in 2022, according to a presentation the company gave during its capital markets day in London. Spending will then remain at that level through 2025 before easing again to under $2bn a year until the end of the decade.
With its low lifting costs and the rising prices for nickel NorNickel is currently the most profitable of the miners in its peer group and has been sharing its windfall with investors in the form of high dividend payments, equivalent to 60% of profit last year.
Amongst the plans to expand production are three stages of the Arctic Palladium project, which could see nickel output jump as much as 30% from 2017’s level by 2030 and PGM output could double. Copper production may also climb 40%.
The total investment in the Arctic Palladium joint venture between
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