Page 128 - RusRPTFeb22

year-on-year. Norilsk Nickel released 4Q21 Operating Results. The miner showed higher q/q output among the whole metals basket, albeit with single-digit softening y/y. The company fully met its revised 2021 production guidance for nickel and copper and outperformed its PGM targets.
Nickel output rose 25% q/q to 63kt (but fell 7% y/y), following the recovery of the Oktyabrsky and Taimyrsky mines, which were restored to full capacity in December, and the Norilsk Concentrator, which also completely recovered last month
For the same reasons, copper production rose 3% q/q to 119kt in 4Q21 (down 8% y/y)
Similarly, palladium output increased 18% q/q to 704koz, but fell 9% y/y, while platinum production rose 23% q/q to 178koz and declined 2% y/y
The company reiterated its outlook for FY22, with nickel output expected within 205-215kt, copper at 365-385kt, palladium at 2,451-2,708koz and platinum at 604-667koz – the figures exclude Bystrinsky GOK project guidance. Norilsk Nickel expects the latter to produce 64-68kt of copper and 225-245 koz of gold.
Overall q/q recovery was expected, given the company was restoring operations at some of its assets. Stronger production guidance for 2022 reinforces our positive view on the name.
Eurofer requests a 3.5-3.8x hike in Severstal's anti-dumping duty. Argus reported. According to market participants, Eurofer requested a EUR 70-75/t (c$79-85/t) duty for the steelmaker. Severstal's current duty was set at EUR 17.6/t (c$19.9/t) in 2017 — the lowest among other Russian exporters, whose duties were between EUR 53.3-96.5/t ($60-110/t). Note, the EU’s HRC imports from Russia rose from 1.3mt in 2019 to over 2mt in 2021. The final outcome of the duties’ review is anticipated by 10 April.
Novolipetsk Mining Kombinat (NLMK) reported an expectedly soft set of 4Q21 results, with EBITDA down 23% QoQ and FCF down 26% QoQ as softer steel prices and higher costs (in particular for coking coal) dented margins. Despite the negative QoQ dynamics, the 4Q21 results were significantly stronger, as the average realized steel price in 4Q21 was up 84% YoY, indicating a sizable downside to pricing and earnings in the sector, we consider. NLMK reported an expectedly soft set of 4Q21 results today. Sales volumes were up 8% QoQ and revenue was up 2% QoQ, as steel prices came down from their multi-year peaks. Higher costs (in particular for coking coal) dented marginality, as EBITDA was down 23% QoQ and the EBITDA margin dropped to 39% (vs. 50% in 3Q21). With FCF down 26% QoQ, NLMK’s BoD recommended paying out 113% of FCF in 4Q21 dividends, signifying a 4Q21 DPS of RUB 12.18/share and implying a dividend yield of 5.5%. Net debt increased insignificantly (+7% QoQ), as the company maintained prudent leverage with ND/EBITDA of 0.4x at YE21. Most of the reported results were within 6% of our estimates (NLMK 4Q21 results preview: Export taxes and
128 RUSSIA Country Report February 2022 www.intellinews.com