Nornickel to relocate copper production to China
To circumvent the sanctions Nornickel will relocate the smelting capacity of the Norilsk copper plant to China. To this end, a joint venture is to be established with China and a production facility built by mid-2027. The company took this decision after Western technology partners refused to supply parts. According to Norilsk Nickel’s management, almost two million tons of copper are currently delivered to China via the Northeast Passage.
A representative of Nornickel told the press that only the smelting capacity of the copper plant is to be relocated. The company itself will remain in Norilsk. Russia produces around 1 million tons of copper per year. Norilsk Nickel accounts for around a third of this quantity.
Vladimir Potanin, President of Nornickel, added: “The copper plant employs around 2 000 people. Everyone who wants to continue working at the company will find a job”.
On April 12, 2024, the USA and the UK announced sanctions against exported Russian metals. Restrictions prohibit the stock exchanges in Chicago and London from buying aluminum, nickel and copper from the Russian Federation.
At the end of March 2024, the US and Europe accounted for a third of Nornickel’s sales, while China accounted for “more than half” of sales. The commissioning of production in China eliminates the high transportation costs via the North Sea route.
Vladimir Potanin:We, like other manufacturers of Russian raw materials, are faced with the rejection of our customers and the need to offer discounts. This pressure forced us to think about how to properly bring our products to the market. And one of these non-standard solutions is to shift part of the production to direct consumption markets”.
The joint venture’s finished copper products would be sold as a Chinese product, which would be more difficult to sanction, explained the president of Nornickel. According to Potanin, this will allow the company to “avoid major losses caused by the current payment difficulties, refusals to supply, discounts on our metal and the build-up of stocks”.
Plant in Norilsk would have to be renovated
The copper smelter in Norilsk is quite old. It was put into operation more than 70 years ago and needs to be modernized.
Vladimir Potanin, reported on difficulties with the program to reduce harmful sulphur dioxide emissions at a producer in the Russian Arctic. According to the entrepreneur, the company does not have access to the necessary Western technologies and equipment to implement the reduction of sulphur emissions in the company due to the sanctions. Perhaps the decision to close down copper production in Norilsk completely and move production closer to Chinese consumers is the right one.
Heiner Kubny, Polar Journal AG
