Norilsk Nickel announced the transfer of copper smelting capacity to China and the creation of a joint venture. Now Russia will supply copper concentrate to China and receive finished copper and alloys from there. This decision was announced by the president and chairman of the board of directors of PJSC MMC Norilsk Nickel Vladimir Potanin on April 22 in an interview with the Interfax agency.
According to him, the decision to close the copper plant in Norilsk is due to the impossibility of modernizing equipment due to Western sanctions, as well as the difficulty of selling Russian rolled metal products in Europe. But Potanin immediately noted that half of copper and alloy exports come from China.
The owner of Norilsk Nickel also complained in an interview about the difficulty of solving environmental problems by reducing emissions during copper smelting.
“We solved environmental problems by creating a fairly large production, which is not profitable at all. … As a businessman, it sometimes bothers me that I have to take not entirely rational actions that cause me losses. This leads us to believe that it is necessary to improve the implementation of our environmental commitments.”He noticed.
In addition, Potanin believes that the transfer of the plant to China will allow Russian companies to avoid losses associated with difficulties with payments, refusals of deliveries, discounts on Russian metal and the creation of inventories. Now these risks represent up to 20% of income.
Establishment of copper smelting plant in China “It will allow us to bring the product closer to the point of consumption and then the final product will be sold as Chinese. And Chinese products are much more difficult to sanction in China than Russian products entering China.”says the Russian businessman.
The Chinese project is planned to be implemented until 2027.
“We plan to supply copper concentrate, about 2 million tons per year, through the Northern Sea Route. We are creating additional logistics capabilities and are preparing to expand the terminals in Dudinka and Murmansk so that they are capable of handling large volumes. Until 2030, our main flows are oriented towards the western corridor: from Murmansk we transport products through transshipment points to Tangier, from where they go to China.”Potanin said.
The Norilsk copper plant currently employs about 2,000 people. The owner of Norilsk Nickel assured that “They will adapt to the general needs of the Norilsk industrial region, where there is practically no unemployment.”
Potanin believes that the copper production capacity in Russia is excessive and, therefore, “much more profitable” export concentrate and smelt copper abroad, rather than creating additional smelting capacity at home.
It is worth noting that global copper prices have soared to their highest level in the last 14 months due to the risk of supply outages. Thus, since the beginning of this year, the price of copper has risen by around 10%. The demand for copper and copper-containing alloys is also growing steadily. Analysts predict a 75% increase in copper prices by 2025.
Source: Rossa Primavera
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