Nornickel forecasts output drop in 2023 due to planned maintenance

Image courtesy of Nornickel

Russian metals producer Norilsk Nickel said on Tuesday it expected its nickel and palladium production to fall this year due to planned refurbishment at its Nadezhda metallurgical plant after posting higher than forecast output in 2022.

The resumption of production at two mines hit by flooding in 2021 and postponing the Nadezhda maintenance helped Nornickel post a 13% year-on-year increase in nickel output to 218,970 tonnes last year, above guidance of 205,000-215,000 tonnes.

Palladium production for the year rose 7% to 2,790 koz, above the forecast of 2,451-2,708 koz.

“We increased the output of all key metals: copper and platinum production was in line with the guidance, while nickel and palladium output outperformed it,” Operational Director Sergey Stepanov said in a statement.

Stepanov told reporters that Nornickel expects to sell all the metal it produces this year, perhaps with China buying a slightly larger share.

Sweeping Western sanctions against Russia over its actions in Ukraine have not directly targeted Nornickel, the world’s largest producer of palladium and refined nickel, but have limited its capabilities, including financial ones, Nornickel boss Vladimir Potanin said on Monday.

The company’s nickel output in 2023 is set to fall between 2.2% and 7%, according to Reuters calculations, to 204,000-214,000 tonnes, with palladium production seen 8%-14% lower than in 2022 in the range of 2,407-2,562 koz.

Stepanov said Nornickel had minimized the impact of geopolitical risks in the last year, but expects them to persist in 2023.

“In particular, we rolled out new logistics and established new procurement channels both within Russia and from friendly countries for the supply of equipment and spare parts,” Stepanov said.

He said some major projects slated for completion after 2024 would be delayed by two to three years due to Western partners refusing to supply equipment, but all major projects this year would be finished on schedule.

In the fourth quarter, nickel production rose by 1% quarter on quarter to 59,735 tonnes, while palladium production fell 7%to 662 koz and platinum output fell by 6% to 160 koz, Nornickel said.

(By Anastasia Lyrchikova and Alexander Marrow; Editing by Christina Fincher and Chizu Nomiyama)

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