NEW YORK MMC
Norilsk Nickel does not expect its revised resource strategy,
which emphasizes the companys Russian operations at the
expense of international assets, will affect its nickel output
"in the long run," chief operating officer Sergey Dyachenko
told AMM during an Oct. 7 investors meeting in New
announced details of the new strategy Oct. 4 after the
companys board of directors approved the plans last month
amm.com, Oct. 4). The worlds largest
producer of nickel and palladium is prioritizing upstream
assets within its Polar and Kola divisions, with plans to
offload operations in South Africa, Botswana and Australia by
Norilsks strategy of focusing on Tier 1
assetshigh-revenue, high-margin operations that provide a
greater return on the companys investmentwhile
divesting itself of international operations that constitute "a
small part of (Norilsks) total production."
through the analysis on all our production, and it was quite
obvious for us that we should focus on our main assets,"
Dyachenko said. "In the long run, I think its not going
to affect production."
strategy includes infrastructure development within its Polar
division projects, which already meet Tier 1 criteria of more
than $1 billion in annual revenue, earnings before interest,
taxes, depreciation and amortization margins over 40 percent
and a reserve life greater than 20 years. The company also
plans to reduce operating costs and improve efficiency within
the Kola division to help it reach targeted levels of
profitability by the end of 2014.
Dyachenko said the
companys potential for growth within those divisions is
"why were divesting from the international assets,"
adding that Norilsk has "already started the process" of
offloading its foreign operations. "Were looking at
proposals from the market. Obviously, were not in a rush;
those assets do produce. If we get a very attractive proposal,
well sell those assets."
The new strategy also
includes an increased focus on existing copper and platinum
group metals (PGM) assets within Norilsks
portfolioassets that Dyachenko said have helped shield
the company from declining nickel prices.
"The uniqueness of the
situation is we have several commodities in our portfolio," he
said. "With copper and PGMs, our operating costs are actually
backed well, so the nickel price decline hasnt affected
us much. Even with the decline in the nickel price, our profit
margin never got below 41 percent."
Dyachenko, who joined
Norilsk in July after three years with London-based copper
mining company Kazakhmys Plc, touted future growth within the
copper sector, but added that Norilsks plans
wouldnt constitute "a huge increase in production."
"Im a strong
believer in the copper market," he said. "I think the demand
for copper is going to grow. With Chinas organization and
the movement of its people, each household will require