Page 183 - RusRPTSept21

construction cost inflation, which is seen as negative by BCS GM.
VTB Capital commented that NorNickel's the decision on interim 2021 dividend is still to come, pending the majority shareholder consensus on the new dividends policy from 2022. VTBC maintained a Hold call on NorNickel shares with unchanged 12-month Target Price of $34 per depository receipt implying a 10% estimated total return.
As followed by bne IntelliNews, Interros of Norilsk Nickel CEO Vladimir Potanin and aluminium major Rusal have renewed the debate on dividend distribution of Norilsk Nickel, on which Rusal relies for a significant part of its cash flow. Norilsk Nickel previously lowered the dividend but proposed a $2bn buyback.
"We think the decision on the 2021 interim dividend might be linked to the ongoing discussion about the new dividend policy for 2023 onwards between Interros and Rusal," VTBC wrote.
"The new dividend policy is likely to be less generous, given the elevated level of capex for 2022-25," Sova Capital warns on August 6, while affirming a Buy call on NorNickel shares.
Norilsk Nickel production recovery underway. Analysts see Norilsk as a good re-rating story – 25-40% re-rating potential should dividend policy be renewed and production restored.
Production recovery is underway, additional claims unjustified. The Oktyabrskiy mine has been up and running since mid-May, Taimyr mine is now at 85% capacity and expected to be at 100% by end-October, while Norilsk concentrator is now at 80% capacity. The total cost of the issues is estimated at 30kt of Nickel, 55kt of Copper, and 450-470 kOz in MPG. Norilsk’s L-T plans are intact. On the additional charges by the Fishing Agency (cRb59bn), the company sees that as unjustified, but is ready to pay the initial claim of Rb3.7bn.
MET expected to increase, but no details provided by the gov’t so far Another key topic was taxation. The company sees the tax coming in the form of higher MET. There are no discussions with the state on the exact mechanism (unlike the previous 3.5x MET hike last year), but the government says the new tax is supposed to target super profits only, i.e., meaning, mid-cycle metal prices might keep the current MET, gradually rising with higher metal prices. The current additional tax (in form of export duties) may cost $0.5bn in 2H21, but, due to WTO rules, export duties cannot be applied for more than 6 months;
183 RUSSIA Country Report September 2021 www.intellinews.com