4 October 2015

Norilsk Nickel preserves projects

Representatives of Norilsk Nickel believe that in the coming years there will be an economic downturn in the PRC. For Norilsk Nickel this is an important factor. It is China that consumes half the volume of nickel . Accordingly, the cost of metals will remain low. For 17 years, this is the worst price for metal, since mid-August. The Russian corporation freezes investment projects, given the current situation. The canned projects are estimated at 500 million USD.

The optimization program was developed in anticipation of a weak recovery in the mid-term perspective of the cost of nickel . To date, the price per ton of metal is 10 thousand USD and no improvement is foreseen. In the first half of the year, the effect of devaluation was considered. However, it is blocked by the offers of commodity markets. In September of this year, the price of nickel was 660000 RUB / ton. In September 2014, the cost of a ton of metal reached 680000 RUB.

Management informed the shareholders of Norilsk Nickel regarding the share of the currency component in the program. In 2016-2017 years. It will reach 40%. For comparison: in 2014-2015 gg. The currency component showed 10-15%. Currency risks of the Russian corporation are related to the acquisition of equipment. It is intended for projects on ecology and capacity improvement. The purchased goods have no analogues.

In this situation, Norilsk Nickel will launch a project to "optimize costs 2.0." In recent years, Norilsk Nickel has been working to reduce costs and costs. Now came the turn of investment projects, which have not yet been approved within the framework of the existing development strategy. Some projects receive a portion of the investment aimed at carrying out design and survey work. As examples, we can consider the "Severny-Deep" mine, the Kola Peninsula. The Maslovsky deposit is in a suspended state. The investment decision will be taken at the end of the design work. If the market conditions remain at the same level, the project will prove to be unrealizable. The advantage will remain for first-class assets. Of the available 280 projects, only 50 can take a fairly high level.

Also, negotiations with suppliers and contractors are planned. They will address issues of reducing the cost of goods and services. The main objective is to reduce operating expenses in certain areas to 10%. By the way, this indicator is not a final condition. This is just a guide. Assignments of this kind are not acceptable to all contractors and partners.

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