Nornickel

Nornickel (Russian: «Норникель» until 2016 Norilsk Nickel, Russian: ГМК «Норильский никель»[4]) is a Russian nickel and palladium mining and smelting company. Its largest operations are located in the Norilsk–Talnakh area near the Yenisei River, in northern Russia. It also has holdings near the Kola Peninsula at Nikel, Zapolyarny, and Monchegorsk; in western Finland at Harjavalta; and in southern Africa in Botswana and South Africa.

OJSC MMC Norilsk Nickel
Public
Traded asMCX: GMKN
LSE: MNOD
ISINRU0007288411 
IndustryMining, Metals
Founded1993 (1993)
Headquarters
Moscow
,
Russia
Key people
Vladimir Potanin (President - Chairman of the Management Board)
ProductsNickel
Palladium
Copper
Platinum
Gold
Cobalt
Selenium
Tellurium
Rhodium
Silver
Iridium
Ruthenium
Coal
Revenue₽537 billion[1] (2017)
$3.28 billion[2] (2016)
$2.53 billion[2] (2016)
Total assets$16.5 billion[2] (2016)
Total equity$3.9 billion[2] (2016)
OwnerVladimir Potanin (32.9%)
Rusal (27.8%)
Roman Abramovich (4.95%)[3]
Number of employees
96.193 (2014)
Websitewww.nornik.ru

Norilsk Nickel is headquartered in Moscow and is the world's leading producer of nickel and palladium. It is ranked among the top ten copper producers.

The company is listed on MICEX-RTS. In early 2019, the key shareholders were Vladimir Potanin's Olderfrey Holdings Ltd (34.57%), Oleg Deripaska's Rusal (27.82%) and Roman Abramovich's Crispian Investments Ltd.[5][6]

In December 2010, Norilsk made a share buyback offer for Rusal's 25% share in the company for US$12 billion, but the offer was declined.[7] In March 2019, Abramovich sold a 1.7% stake in the company for US$ 551million predominately to British-based and Russian investors. Potanin and Deripaska's Rusal were blocked from purchasing any shares.[8]

History

Mining began in the Norilsk area in the 1920s. The Soviet government created the "Norilsk Combine" in 1935 and passed control to the NKVD. In 1943, Norilsk produced 4,000 tonnes of refined nickel and in 1945 hit the target figure of 10,000 tonnes. Mining and metal production continued first with Gulag forced labour, later with much volunteer labour owing to the comparatively good wages offered.

In 1993 after the fall of the Soviet Union a joint-stock company was created, RAO Norilsk Nickel. Two years afterwards control over the deeply indebted company, which was bleeding cash at a rate of about $2,000,000 a day amid falling nickel prices, was given to a private company, Interros. By the time the privatization was completed in 1997, the company became profitable and the workers were paid. Nowadays average pay is over $1,000 per month and workers enjoy two to three months of vacations; nevertheless, working and living conditions in Norilsk remain harsh.

In July 2000 at the St. Petersburg Research Institute of the Arctic and Antarctic (Russian: Арктический и антарктический научно-исследовательский институт), Norilsk Nickel investigated using decommissioned nuclear powered submarines, both from the United States and Russia, to transport materials along the Northern Sea Route (Russian: Северный морской путь (Севморпуть)) between the Yenesei and elsewhere.[9]

With a cost of $72–80 million per Typhoon submarine overhaul and refit, refitted decommissioned Typhoon submarines, which, after overhaul and refit, would have a modified ice breaking bow capable of breaking ice up to 215 cm (85 in) thick in seawater and up to 150 cm (59 in) in the freshwater mouth of the Yenisei, were thought to be able to transport up to 12,000 tonnes of supplies and nickel between Dudinka and either Murmansk or Arkhangelsk.[9] The Murmansk Shipping Company (MMP or MSCO) (Russian: Мурманское морское пароходство) had been providing icebreakig services at a charge of US$11.35 per tonne of cargo (in 2000).[9] Three submarines, which would be needed for the project to be feasible, would be undergoing refit and overhaul between 2000 and 2003.[9]

However, no agreement could be reached over who would perform the refit and overhaul of the submarines, nor who would own and control the submarines (Defense, MMP, or Nornickel), nor who would pay for the cost of the overhaul and refit which Anatoly Gorshkovsky, the head of the Northern Sea Route administration in the Russian Ministry of Transport, suggested to Interfax that the state (either a Russian Federal Ministry or Defense), MMP, and Nornickel should all contribute funds.[9] There is no agreement between the United States and Russia to use United States-built submarines nor to use nuclear-powered submarines for transporting supplies.[9]

In 2002, Nornickel was the largest volume of shipping for the Murmansk Shipping Company along the Northern Sea Route.[10]

Starting in 2002, MMC Norilsk Nickel began purchasing gold mining assets, which were spun off in 2005 as Polyus Gold.

In 2003, the company took control of Stillwater Mining Company, the only US producer of palladium. Stillwater operates a platinum group metals (PGM) facility in Stillwater, Montana in the USA. In November 2010, Norilsk Nickel announced that it was selling Stillwater.[11]

During 2007, Norilsk acquired a host of mining and metallurgical assets abroad, transforming itself into a multinational with operations in Australia, Botswana, Finland, Russia, South Africa, and the United States. The key deal was completed on June 28, 2007, when Norilsk Nickel acquired about 90 per cent of Canada's LionOre Mining International Ltd, the world's 10th-largest nickel producer at the time. This takeover, valued at US$ 6.4 billion, is the biggest acquisition abroad by a Russian company, making Norilsk Nickel the world's largest nickel producer.[12][13]

On 27 February 2008, Norilsk Nickel through North Star LLC diversified into the coal mining industry by obtaining mining rights for 33.6 million rubles to the estimated 5.7 billion tonnes at the Syradasai Field near the port of Dixon (Russian: Диксон) in Taymyrsky Dolgano-Nenetsky District (Russian: Таймыр).[5][14][15] In the coal mining industry, it competes with Rio Tinto and BHP Billiton.[5] North Star LLC (Russian: ООО «Северная звезда»), a firm affiliated with Norilsk Nickel or Nornickel, will develop the field with $1.5 billion in improvements at the Port of Dixon on Cape Chaika (Russian: мыса Чайка) from Nornickel, which owns the port.[5]

The only competitor for the rights to the Syradasai Field was from the Golevskaya Mining Company LLC (Russian: ООО «Голевская горнорудная компания»).[14] The Syradasai Field is 105 to 120 km southeast of Dixon in the Taimyr-Turukhansk support zone (Russian: Таймыро-Туруханской опорной зоны).[15][16] A 120 km road and railway will be built to connect the deep-sea port on Cape Chaika to the massive coal deposit by 2019.[15] CC VostokUgol (Russian: УК «ВостокУголь») or Vostok Coal will export up to 10 million tonnes of coal annually from the open pit mine to Western Europe and the Asia-Pacific regions.[16][17]

Nornikel has been ranked as the 17th best of 92 oil, gas, and mining companies on indigenous rights and resource extraction in the Arctic.[18]

Operations
The Norilsk Nickel plant in Nikel
False-color satellite image of Norilsk and the surrounding area

The nickel deposits of Norilsk-Talnakh are the largest nickel-copper-palladium deposits in the world.[19] The deposit was formed 250 million years ago during the eruption of the Siberian Traps igneous province (STIP). The STIP erupted over one million cubic kilometres of lava, a large portion of it through a series of flat-lying lava conduits lying below Norilsk and the Talnakh Mountains. The Siberian Traps are considered to be responsible for the mass extinction event at the end of the Permian.

The ore was formed when the erupting magma became saturated in sulfur, forming globules of pentlandite, chalcopyrite, and other sulfides. These sulfides were then "washed" by the continuing torrent of erupting magma, and upgraded their tenor with nickel, copper, platinum, and palladium. The current resource known for these mineralised intrusions exceeds 1.8 billion tonnes.

The ore is mined underground via several shafts, and a decline. The ore deposits are currently being extracted at greater than 1,200 m below ground. The ore deposits are drilled from the surface.

The deposits are being explored using electromagnetic field geophysics, with detection loops on the Earth's surface with dimensions of over 1,000 m on a side. They are conclusively able to image the conduction nickel ore at depths in excess of 1,800 m.

Production divisions

The company currently has five main operational divisions:

  • The Polar Division of MMC Norilsk Nickel and ancillary activities, located in the Taimyr Peninsula
  • Kola MMC, and ancillary activities, located in the Kola Peninsula (incorporating the Pechenganickel and Severonickel Combines, the former in Nikel City and Zapolyarny, the latter in Monchegorsk)
  • Norilsk Nickel Harjavalta, Finland's only nickel refining plant, purchased from OM Group in 2007
  • Norilsk Nickel Africa, which includes stakes in mines in Botswana (85% of Tati Nickel) and in South Africa (50% of Nkomati), both formerly owned by LionOre

Environmental problems

Norilsk Nickel is known as one of Russia's most polluting companies, releasing approximately 1.67m tonnes of harmful sulphur dioxide every year into the air, according to 2018 figures.[20]

Ore is smelted on site in Norilsk. The smelting is directly responsible for severe pollution, including acid rain and smog. It is estimated that Norilsk facilities emit 1.86 million tonnes of sulfur dioxide to the atmosphere annually, 1.9% percent of global emissions.[21]

The pollution originating from the Kola division of the company is also affecting Norway,[22] which has, since 1990, offered financial support to clean up the operation. Due to a number of factors, however, this has not materialized.

2007 - Rosprirodnadzor (Federal Environmental, Industrial and Nuclear Supervision Service of Russia) took water samples in Norilsk as part of the check up. The check up was initiated by the group of the city dwellers who filed the petition claiming deterioration of water quality due to industrial activity of NN branch in this city. Newspaper Kommersant was informed by Oleg Mitvol, the Chairman of Rosprirodnadzor, that results of the water tests were expected to be ready by the end of August. Company official said in their comment that NN spent over 19 bln roubles on environmental activity and 1 billion more will be spent till 2015. When asked by the reporter if Norilsk Nickel can suffer any consequences after the results of the check up, the state official said that he won't make any promises or predictions.[23][24][25]

The environmental problems at Norilsk stretch back over decades, but in the last 10 years when current NN management came to power it did not get much better. Back in 2004 M. Prokhorov claimed that NN will be able to resolve most of ecological problems in the area within 5–6 years. By 2008 this timeline moved to 2011 or 2015. However, NN claims to be a socially responsible business and invests in modernization.

Norilsk Nickel has worked consistently to reduce emissions of major air pollutants. In 2006, the company reported investment of more than US$5m to maintain and overhaul its dust and gas recovery and removal systems. It asserts a commitment of nearly US$1.4m for its air pollution prevention plan. However, official statistics state that emissions remain extremely high. In 2006, international non-for-profit organization Blacksmith Institute declared Norilsk Nickel one of the top-10 most polluted places in the world.[26] NN wrote a protest letter but state of affairs was left unchanged. Local environmental experts report that although there have been some reductions in pollution levels, levels of SO2, HS, phenol, formaldehyde, but dust had increased; levels of nickel and copper had increased by 50%. Morbidity rates are stable and death rates are decreasing.

In September Rosprirodnadzor stated that NN significantly exceeds allowed concentrations of polluters in open water reservoirs (river Shuchya, river Novaya Nalednaya and others) located near industrial enterprises of NN objects. Also the agency stated very serious violations of temporary norms for certain polluting substances.[27]

Nevertheless, there were no measures taken against NN. At the end of December the company issued a press release on cooperation with Federal Environmental, Industrial and Nuclear Supervision Service of Russia (Rostekhnadzor) and Norilsk Nickel signed a protocol of cooperation with regard to industrial safety and environment protection in the development of the Company's operations.

In 2010, Vladimir Putin visited Norilsk and complained about the pollution, threatening a “significant increase in environmental fines” if the company did not modernise its plant. By 2013, owner Vladimir Potanin had begun to invest in environmental measures. In June 2016, Norilsk shut down one of its factories, which was emitting 380,000 tonnes of sulphur dioxide every year, 25% of the total of sulfur emissions in the city, in an effort to clean up its environmental record.[28][26] It also said it would invest £3.5bn to modernise manufacturing by 2020.[26]

At the end of 2016, Nornickel signed a major contract worth $1.7 billion with Canadian company SNC-Lavalin, to install sulfur dioxide filtration and storage technologies on its plant in Norilsk,[29] in what is said to be one of the largest environmental projects of its kind. Once complete in 2020, sulfur emissions will be cut by up to 75% as a result of the work done.[30]

In April 2018, amid rising pressure from the Russian government and Western investment funds, the company announced it would be investing in a US$1bn processing plant, which would convert sulphur dioxide produced during the metal smelting process into gypsum. The plant will be finished in 2022 in order to meet obligations to reduce its harmful emissions by 75% or risk financial fines 100 times higher than the ones at the time.[20]

In 2019, it was reported that the group's total environmental protection expenditure rocketed by 117.9%. The cornerstone of Nornickel's £20 billion environmental programme is the $2.5bn 'Sulphur Project' aimed at recycling toxic SO2 emissions, cutting those emissions by 75% by 2023 in its hometown of Nickel. The project will help capture 1.5 to 1.7 million tonnes of sulphur dioxide per year and recycle those emissions into marketable products. [31] In November 2019 Norilsk Nickel announced plans to cut sulphur dioxide emissions in the region by 90% by 2025 from 2015 levels.[32]

2020 fuel spill
Main article: Norilsk oil spill

On 29 May 2020, a fuel storage tank owned by Nornickel subsidiary Norilsk-Taimyr Energy (NTEK) collapsed, flooding the nearby Daldykan River with up to 21,000 cubic metres (17,500 tonnes) of diesel oil.[33] Russian President Vladimir Putin declared a state of emergency.[34] Diesel oil is used as a backup fuel for the NTEK coal-fired combined heat and power plant.[35] The diesel fuel storage tank failed when the permafrost it was built on began to soften.[36] An area of up to 350 square kilometres (135 square miles) was contaminated. Cleanup efforts are anticipated to be difficult as there are no roads and the river is too shallow for boats and barges. Former deputy head of Rosprirodnadzor Oleg Mitvol estimated the clean-up cost would be about 100 billion roubles (US$1.5 billion) and take five to 10 years.[37]

Finland

The Russian-owned Norilsk Nickel refinery in Harjavalta western Finland released 66,000 kg nickel in the local Kokemäenjoki (Kokemäki River) in July 2014. After release the nickel concentrations were 400 times normal levels. This was the largest known nickel release in Finnish history.[38][39]

Gipronickel Institute, in St Petersburg performs the design and construction of Norilsk's facilities. Gipronickel does research in every field of metallurgy, including extraction, patenting, design and more.

Norilsk Nickel uses the Yenisei River port of Dudinka to load its finished product on ships for export.

Interros Holding Company, based in Moscow, is the controlling shareholder of Norilsk.

In partnership with Argosy Minerals of Australia, Norilsk attempted to operate Nakety/Bogota, a nickel mine on the island of New Caledonia in the South Pacific. Norilsk has withdrawn from this project.

Competition

Vale Inco, BHP and Anglo Platinum are important competitors to Norilsk in the production of nickel and of palladium.

Fleet

Company fleet provides sea transportation of cargo and concentrates from Norilsk to ports with rail connections. In 2008 Norilsk Nickel ordered five new ice-breaking cargo freighters.[40]

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See also

References
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  2. http://www.nornik.ru/assets/files/2017/IFRS-Eng-USD-Consolidation-Reporting.pdf.
  3. "MINING AND METALLURGICAL COMPANY NORILSK NICKEL : Shareholders Board Members Managers and Company Profile | RU0007288411 | MarketScreener". www.marketscreener.com.
  4. ""Норильский никель" изменил название и логотип". 14 July 2016. Archived from the original on 1 December 2017.
  5. Федоринова, Юлия (2009-10-19). «Норникель» будет добывать уголь на Таймыре: «Норникель» не отказался от планов разработки угольного месторождения на Таймыре. С 2015 г. компания хочет добывать там 8 млн т коксующегося угля в год [Norilsk Nickel will produce coal in Taimyr: Norilsk Nickel has not abandoned plans to develop a coal field in Taimyr. By 2015, the company wants to mine 8 million tons of coking coal per year]. Vedomosti (in Russian). Retrieved 2018-07-06.
  6. "Акции и АДР". Норникель (in Russian). Retrieved 2019-07-27.
  7. "Mining Journal - Rusal rejects Norilsk's buy-back offer". 2010-12-18. Archived from the original on 2010-12-19. Retrieved 2010-12-18.
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  9. Максимов, Владислав (Maximov, Vladislav) (2000-07-26). "Норильский никель" испытал подлодку [Norilsk Nickel has tested the submarine]. Vedomosti (in Russian). Archived from the original on 2017-02-02. Retrieved 2018-10-25.
  10. Мурманская область. Более 2 млн. т грузов будет перевезено по Севморпути в 2003 году [Murmansk region. More than 2,000,000 tonnes of cargo will be transported by the Northern Sea Route in 2003] (in Russian). Regnum. 2002-12-17. Retrieved 2018-10-25.
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  13. "Breaking News, World News & Multimedia". Archived from the original on 2014-01-08.
  14. "Северная звезда" выиграла права на месторождение угля на Таймыре ["North Star" won the rights to the coal deposit in Taimyr]. taiga.info website (in Russian). 2008-02-27. Retrieved 2018-07-06.
  15. Компания "Северная звезда" начнет освоение угольного месторождения на Таймыре в 2019: Предприятие планирует создать угольный разрез мощностью 10 млн тонн в год [The company "North Star" will begin development of the coal field in Taimyr in 2019: the firm plans to mine at a capacity of 10 million tonnes per year] (in Russian). TASS. 2018-04-12. Retrieved 2018-07-06.
  16. Программу социально-экономического развития Арктической зоны, в которую входит и Норильск, правительство России продлило до 2025 года. [The Russian government extended the program of social and economic development of the Arctic zone, which includes Norilsk, until 2025.]. Gazeta ZR (in Russian). 2017-09-11. Retrieved 2018-07-06.
  17. УК «ВостокУголь». CC VostokUgol website (in Russian). Retrieved 2018-07-06.
  18. Overland, Indra (2016). "Ranking Oil, Gas and Mining Companies on Indigenous Rights in the Arctic". ResearchGate. Arran. Retrieved 2 August 2018.
  19. Glazunov, Mikhail (2013). Business in Post-Communist Russia: Privatisation and the Limits of Transformation. London: Rouledge. p. 121. ISBN 9781135021504. Retrieved 15 June 2020.
  20. "Subscribe to read". Financial Times. Retrieved 2019-07-27.
  21. Raputa, V.F.; Simonenkov, D.V.; Belan, B.D.; Yaroslavtseva, T.V. (18 March 2019). "Estimation of SO2 Emission into the Air of the Norilsk Industrial Region". Atmospheric and Oceanic Optics. 32 (6): 650–654. Retrieved 15 June 2020.
  22. "Nornickel promises halt in death clouds". The Independent Barents Observer. Retrieved 2019-07-27.
  23. (in Russian) РУСАЛ призвал не кормить троллинг по поводу толлинга Archived 2012-03-05 at the Wayback Machine, Companies' News
  24. (in Russian) Экология должна быть экономной? Archived 2011-08-17 at the Wayback Machine, Polar pravda, #114, 08/08/2007
  25. (in Russian) Вечно далёкие горизонты Archived 2011-08-17 at the Wayback Machine, Polar pravda, #77, 06/01/2007
  26. Luhn, Alec (2016-09-15). "Where the river runs red: can Norilsk, Russia's most polluted city, come clean?". The Guardian. ISSN 0261-3077. Retrieved 2019-07-27.
  27. http://control.mnr.gov.ru/part/?act=print&id=4088&pid=508%5B%5D
  28. "Norilsk's 1942 nickel plant gone but far from forgotten: Andy Home - Reuters". webcache.googleusercontent.com. Retrieved 2019-07-27.
  29. "SNC-Lavalin awarded contract by Norilsk Nickel for a sulphur dioxide mitigation project in Russia - SNC-Lavalin". www.snclavalin.com. Archived from the original on 26 March 2018. Retrieved 25 April 2018.
  30. "Russia's most polluted city eyes a clearer sky". thebarentsobserver.com. Archived from the original on 25 March 2018. Retrieved 25 April 2018.
  31. "Mining companies spending millions to help boost the "green" economy - Analyses - EBR". www.europeanbusinessreview.eu.
  32. "UPDATE 2-Nornickel plans to cut dividends to boost investment". November 18, 2019 – via www.reuters.com.
  33. "Diesel fuel spill in Norilsk in Russia's Arctic contained". TASS. Moscow, Russia. 5 June 2020. Retrieved 6 June 2020.
  34. "Putin orders state of emergency after huge fuel spill inside Arctic Circle". The Guardian. June 3, 2020. Retrieved June 4, 2020.
  35. Skarbo, Svetlana (2 June 2020), "State of emergency in Norilsk after 20,000 tons of diesel leaks into Arctic river system", The Siberian Times
  36. Weise, Elizabeth; Zaiets, Karina; Gelles, Karl (6 June 2020). "Russia declares state of emergency over Arctic Circle oil spill caused by melting permafrost". USA TODAY. Retrieved 6 June 2020.
  37. Russia's Putin declares state of emergency after Arctic Circle oil spill, BBC, 4 June 2020
  38. Environmental authority: Nickel leak threatening southwest river Archived 2014-07-12 at the Wayback Machine yle 8.7.2014
  39. Harjavallan nikkelipäästö Suomen historian suurin Archived 2014-07-12 at the Wayback Machine yle 8.7.2014
  40. Hugo Miller (March 10, 2008). "Ships intrude on Arctic's warming waters". Los Angeles Times. Retrieved 2008-03-10. The company ordered five reinforced cargo vessels that can plow through the waters north of Siberia as new sea routes open. Moscow-based Norilsk, the world's biggest producer of nickel, is spending at least $467 million to buy reinforced vessels rather than rent both freighters and icebreaker escorts.
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