Nornickel increases capex to up to $2.5bn per year

21 November 2017 (Last Updated November 21st, 2017 11:34)

Russian nickel and palladium mining and smelting company Norilsk Nickel is planning to increase its capital expenditure to between $2.3bn and $2.5bn per year in 2019 and 2020.

Nornickel increases capex to up to $2.5bn per year
Operations at one of Nornickel’s mines. Credit: Norilsk Nickel.

Russian nickel and palladium mining and smelting company Norilsk Nickel is planning to increase its capital expenditure to between $2.3bn and $2.5bn per year in 2019 and 2020.

The capital expenditure, which stays at $2bn for 2018, is directed at implementation of the company’s environmental programme and infrastructure modernisation plans.

Under the environmental programme, the company will focus on the implementation of SO2-capturing technologies and reconfiguration of the copper production chain.

Meanwhile, the modernisation exercise involves the implementation of equipment replacement strategies.

Nornickel president Vladimir Potanin was quoted by Reuters as saying: “In the next three years, we are budgeting for an increase in capital investments that will allow us not only to maintain metal production volumes but also put a solid foundation under new-perspective projects.”

Growth opportunities beyond 2022 include an increase in operational efficiency and development of Talnakh deposit.

“Growth opportunities beyond 2022 include an increase in operational efficiency and development of Talnakh deposit.”

Nornickel also intends to achieve a reduction of 75% in total SO2 emissions in the Norilsk Industrial Area by 2023.

The company expects its net working capital to remain around $1bn, while the ratio of net debt to earnings before interest, taxation, depreciation and amortisation (EBITDA) is anticipated to be in the range of 1.5-2.5.

The company is targeting annual cost reduction by $200m to $300m from 2020.

A feasibility study is currently in progress at the company’s South Cluster project, with the final investment decision expected to take place in the first half of next year.