Nornickel to present revised investment program by end of year, completion of South Cluster project likely to be delayed

MOSCOW. June 1 (Interfax) - Norilsk Nickel may present a revised investment program by the end of this year in light of the difficulties with supply of equipment and technologies that came about last year, Mikhail Borovikov, head of Investor Relations at Nornickel, said during a podcast with Dmitry Glushakov, an analyst at My Investments. The revision will mainly affect the timing of a number of projects, including the Southern Cluster.

According to him, "the large-scale program of investments in mining projects ... is now under revision."

"We are now in the final stages of revising our investment program. We will show an updated [investment program] by the end of this year, I think" the IR chief said.

"This does not mean that we are giving up on them [investments] completely. We continue to believe that we need to continue to exploit the beautiful ore body that we got and produce metals that will be in demand in 5 and 10 years. What the time frame will be is another question," he said.

Borovikov particularly mentioned the Southern Cluster project (Medvezhy Ruchey). "As for the Southern Cluster, which at its peak will produce an additional 700,000 ounces (in addition to the 2.5 million ounces we produce now), we planned to bring this project to full capacity in 2024-25 initially. But naturally, the events of 2022 have seriously complicated our plans: we're talking about the supply of equipment and some technology for both the 'mountain' and the processing facilities," Borovikov said.

At the same time, he noted that Nornickel remains focused on unlocking additional value for shareholders in metal production, especially given that the company has the lowest production cost in the industry. This factor, coupled with the growth of interest rates and the cost of funding (by about 2.5 times) will be a competitive advantage, the Nornickel executive said.

Nornickel had already announced earlier that implementation of two major projects would be postponed due to problems with components: the third smelting complex at the Nadezhda Metallurgical Plant and the new Norilsk Concentrator (Norilsk Concentrator-2). The construction of Norilsk Concentrator-2 was due to start around 2027, but the deadline has now apparently been pushed back to 2029. The launch of Norilsk Nickel's third smelter has been shifted to 2029 instead of 2025-26, said Sergei Stepanov, Senior Vice President - Production Director.

The project to develop production at the Southern Cluster deposits, whose ores are poorer than those of Talnakh, is linked to the expansion of beneficiation and smelting capacities. Plans called for increasing production at these deposits from 2-3 million tonnes to 9 million tonnes of ore by 2027-28, boosting output n by 800,000 ounces of platinoids, 13,000 tonnes of nickel and 20,000 tonnes of copper per year by that time.