Norilsk Nickel to post $5 bln profit in 2011, not planning offer to Rusal in near-term
MOSCOW. Jan 20 (Interfax) - MMC Norilsk Nickel will have a net profit to IFRS of about $5 billion for 2011, which is about the same as the figure for 2010, the Russian mining giant's chief executive, Vladimir Strzhalkovsky said on Rossiya 24 television on Thursday.
"Net profit will be about the same as last year, it is expected to be $5 billion," he said.
The company's debt burden increased following a share buyback, but it is not critical for Norilsk Nickel, allows the company to steadily reduce its principal debt, and is not affecting investment or production activities, Strzhalkovsky said.
He also said that Norilsk Nickel would not in the near future make another offer to Rusal to buy out the aluminum giant's stake in Norilsk. There is no point in making an offer, as Rusal rejected several previous proposals, and furthermore following its recent buyback Norilsk Nickel does not have the cash for such a deal.
"We will not, naturally, be making such offers in the near future. There is no point, as Rusal's position has been defined quite clearly. And then, the company does not have sufficient funds at the moment," Strzhalkovsky said.
Asked about the fate of 7.71% of Norilsk Nickel shares acquired in the buyback by subsidiary NN Investments, Strzhalkovsky said some of the shares might be cancelled.
"Part of the shares might be cancelled, the greater or lesser part. This requires a consolidated decision by shareholders, meetings of the board of directors and shareholders must be held, the procedure for another buyback to the parent company must be launched - this is a fairly complex technical process," Strzhalkovsky said, adding that now is a fairly difficult time for both the company and the economy.
If there are changes in charter capital, all creditors can call in loans, he added. "Some funds were raised using Norilsk Nickel shares as security. We need to understand what will happen with the debt burden and what risks the company can afford to take," Strzhalkovsky said.
Commenting on world prices for the metals that Norilsk Nickel produces, Strzhalkovsky said that low prices for nickel and platinum group metals are not critical for the company.
"A deterioration of prices for nickel and platinum group metals will be unpleasant for most metal producers. We hope that there will not be a catastrophic situation," he said.
Norilsk Nickel's Russian production sites will decrease metal production slightly in 2012 due to under-investment in the mid-2000s, but the company's investment program will make it possible to restore and increase production, Strzhalkovsky said. The investment program for Norilsk Nickel's Russian assets is $3.2 billion for 2012.
The investment program for 2012 will focus on mining of the most valuable ores; construction, modernization and expansion of enrichment and processing plants; updating of smelting facilities; and development of infrastructure, including gas supply, Strzhalkovsky said.