Norilsk Nickel budgets for conservative metal prices in 2014
MOSCOW. Jan 17 (Interfax) - MMC Norilsk Nickel is budgeting for conservative metals prices in 2013, the Arctic mining and smelting giant's CFO, Sergei Malyshev, told reporters.
"Our nickel price forecast for this year is a little higher than the current price but lower than some optimistic forecasts, which envisage growth to $16,000/tonne. The forecasts for copper and platinum-group metals are also conservative," Malyshev said.
Nickel fell 20% to 13,900/tonne in 2013 but has risen nearly 5% this year to $14,500 due to the ban on ore exports by Indonesia. Nickel accounts for 45% of Norilsk Nickel's sales revenue, copper - 25%, palladium - 19% and platinum - 10%.
The prices in Norilsk Nickel's budget are "a little lower than a consensus forecast by leading analysts, even without the Indonesian export ban factor," Malyshev said. "And our budget has a large safety margin with that factor," he said.
"It will be at least a quarter from now before we are able to assess how Indonesia's decision might affect the price situation," Malyshev said. "Our marketing experts say there won't be an abrupt price rise and it will be the end of the year, when the situation with Chinese stockpiles is clear, before we'll know when the nickel market might be in deficit," he said.
Asked whether Norilsk Nickel's investment program might be scaled back if the metals market deteriorates, Malyshev said each capex project had passed stress tests and had been assessed for two parameters: a drop in metals prices and rise in project costs. "Forecasts by analysts do not contain price deviations that exceed the levels set for our stress tests," he said.
Three-quarters of the 2014 investment program has been allocated for projects in the Norilsk industrial district.
The 2014 investment program also contains funding for the Trans-Baikal program, which is being implemented on schedule, Malyshev said.
Norilsk Nickel last year suggested delaying the launch of a mine at the Bystrinskoye gold-copper field in the Trans-Baikal territory until 2018 due to delays with building the necessary transport and power infrastructure. The company is also proposing to delay the second phase of the Trans-Baikal project, which is to develop the Bugdaiskoye molybdenum field, by five years due to falling metal prices.
Norilsk Nickel's five-year capex plan, which envisages annual investment of more than $2 billion, caters for the possible expansion of the Talnakh Concentrator to 20 million tonnes, Malyshev said. Norilsk Nickel is thinking of shifting all its Polar Division's concentrating operations to the Talnakh site and of closing or re-profiling the Norilsk Concentrator and Nadezhda Metallurgical Plant.