Nornickel Looking to Make Most of Electric Car Boom

In order to make the most out of an expected boom in demand from electric vehicle makers, Russian nickel and palladium giant Norilsk Nickel plans to ramp up production over the next five years, its CEO and top shareholder Vladimir Potanin said in an interview with Reuters.

The company, which competes with Brazil’s Vale for the title of the world’s largest nickel producer, has been profitable for years thanks to its resource-rich Arctic operations. As the Nornickel focused on revamping production facilities, its output has been relatively stable due to a decline in metal content in ore.

Potanin says that now, with nickel set to benefit from its use in batteries for electric vehicles, the time is right to step up production.

The firm could lift nickel and copper output by 15 percent, and production of platinum group metals (PGMs) by 25 percent, by 2025 from 2017 levels if it launches two new projects.

Nickel output alone could rise to 240,000 tons by 2025 from 210,000 tons in 2017. This 30,000 tonnes equates to about a third of Nornickel’s estimate of the world’s nickel deficit for 2019, the CEO said.

The two projects being considered by Nornickel, which currently accounts for 23 percent of global high-grade nickel output and is the world’s top palladium producer with the share of 40 percent, are the third stage of its Talnakh concentrator upgrade and South Cluster, which may start PGM production.

If Nornickel goes ahead with the two new projects, Potanin said he would like to make sure the company’s dividend payments are evenly distributed in the years of high investment, while remaining the same in total over the next 4-5 years. The environmental program will peak in 2020-2021.

He said there were no immediate plans to discuss dividends with U.S.-sanctioned aluminum giant Rusal, which holds 28 percent in Nornickel. Potanin owns a 34 percent stake in the nickel and palladium producer.