Norilsk Nickel is seeking to purchase two nickel deposits in Voronezh. At a meeting with Prime Minister Vladimir Putin on Friday, Norilsk Nickel's General Director and Board Chairman Vladimir Strzhalkovsky reported that the company's financial results in 2010 were above their own forecasts, with revenue of about $15 billion. Strzhalkovsky appealed to the prime minister to hold a competition for control of two promising deposits in the Voronezh Region, pledging to invest 1.2 billion roubles in them if Norilsk Nickel were to win. Putin agreed to look into the initiative.
Prime Minister Vladimir Putin met with Norilsk Nickel General Director Vladimir Strzhalkovsky on Friday. Strzhalkovsky told the prime minister that the company expects revenues of about $15 billion with a net profit of over $5 billion for 2010. "In all honesty, we did not expect such outstanding results," Strzhalkovsky said.
Strzhalkovsky also said that the company plans to increase its investments this year to around 90 billion roubles, 2.3 times more than in 2010, and that their investments may reach $32 billion by 2025. Norilsk Nickel's capitalisation grew by almost 90% last year. They paid out around 75 billion roubles to the budget, a threefold increase over 2009. This year, that figure should be about 85 billion roubles.
Norilsk Nickel is one of the world's largest producers of nickel and palladium. According to the International Financial Reporting Standards (IFRS), the company's net profit in the first half of 2010 totaled $2.34 billion. From January to June, they earned $6.83 billion in revenue. In 2009, their net profit was $2.65 billion, with earnings of $10.15 billion. Their biggest shareholders are Vladimir Potanin's "Interros," with a 30% share, and Oleg Deripaska's UC Rusal, with 25%.
Norilsk Nickel's General Director asked the prime minister to call for a competition for the development rights to the Yelanskoye and Yolkinskoye nickel deposits in the Voronezh Region, two large deposits which the company has great interest in. "We have prepared a request for you to hold a competition this year," Strzhalkovsky said, receiving as a reply from Putin, "We'll see." According to Strzhalkovsky, these two sites are the last remaining major nickel deposits in Europe. If they win the competition, he said, they are ready to invest 1.2 billion roubles in mining from 2011 to 2018. The processing capacity would be up to two million tonnes of ore annually.
The two deposits were meant to be sold back in 2008. The department of geoecology and licensing of the Voronezh Region had prepared the documents to hold the competition, but it never took place as a result of the economic downturn. According to data from the Ministry of Natural Resources and Environment, a total of five nickel-copper sulfide deposits were discovered in 1970s and 80s: the Nizhnemamonskoye, Podkolodnovskoye, Yubileynoye, Yelanskoye and Yolkinskoye deposits. These deposits form a major nickel-platinum province third in Russia only to the Taymyrskaya and Kolskaya provinces. Experts of the Russian Academy of Sciences assess the nickel contents to vary from between 0.2-0.7% to 4-5%. The deposits' reserves have not been disclosed. But Nikolay Chernyshev, a doctor of geological-mineralogical sciences and a corresponding member of the Russian Academy of Sciences, estimates the Yelanskoye and Yolkinskoye deposits to be quite large, and believes that there are enough ore reserves for 30 years of intensive mining.
Alexei Morozov of UBS believes Norilsk Nickel's interest in the new deposits is quite justified; the company entered 2011 with very high prices for nickel, copper, palladium and platinum, that are unlikely to decline. Mikhail Stiskin of "Troika Dialog" considers Norilsk Nickel's to be in a unique state. He expects their EBITDA to total $8 billion at the end of 2011.
Olga Mordyushenko