Nornickel moves production to China to circumvent sanctions

Vladimir Potanin, the main shareholder of mega-polluter Nornickel, admits in a remarkable statement with Kremlin’s information agency Interfax that Western sanctions reduces the company’s revenue by up to 20%.

To circumnavigate sanctions, Potanin says Nornickel plans to establish a joint venture with a Chinese company and move parts of the copper smelting to China.

It was earlier in April that the United States and United Kingdom imposed sanctions on nonferrous metals from Russia.

Nornickel is one of the world’s largest producers of nickel, copper and platinum, with mines and factories in the Murmansk region and in Norilsk on the Taymyr Peninsula in northern Siberia.

Although the European Union has not imposed similar sanctions, many European customers refuse to buy products from Nornickel. The important London Metal Exchange is due to the UK sanctions now barred from accepting nonferrous metals from Russia.

Nickel, copper and cobalt are important metals in battery production for electrical vehicles (EVs).

Potanin said to Interfax: “… pressure forced us to think about how to better deliver our commodity to markets. And one such nonstandard decision is moving a portion of production markets of direct consumption.”

China is the world’s largest producer of batteries for EVs.

By moving production to China, Potanin said it “will enable us to avoid big losses due to current difficulties with settlements, supply refusals, discounts on our metal and the formation of inventories.”

Nornickel said in its 1Q production report that its Kola division last year delivered a trial batch of premium quality nickel for the Chinese electroplating sector and will continue to do so this year.

Potanin did not name which company he wants to team-up with in China. The new plant should be constructed by mid-2027 and will get about two million tons of copper concentrate a year. Shipment to China will take place along the Northern Sea Route, the Arctic shipping lane along the partly ice-covered waters north of Siberia.

Loading onto one of Nornickel’s ice-strengtened vessels at the port of Dudinka by the Yenisey River. Photo: Thomas Nilsen

Nornickel has its own fleet of ice-strengthened, partly icebreaking, vessels for shipping of metals and concentrate.

As previously reported by the Barents Observer, Nornickel’s Kola division has shut down the old copper plant in Monchegorsk and moved production to Norilsk awaiting a new state-of-the-art technology plant to replace production in Monchegorsk.

Modernization of the Nadezhda factory in Norilsk has been going on for years, with Nornickel promising a sharp reduction of sulphur dioxide pollution.

It is production currently taking place the Nadezda plant that will be moved to the new joint-venture factory in China.

First built by Stalin’s prisoners in the Norillag labor camps from 1935 to 1956, the factories in Norilsk is mainly infamous for enormous air pollution problems. Since Vladimir Potanin gained control of the company through the controversial loans-for-shares program in the early 1990s, he has become one of the wealthiest oligarchs in post-Soviet Russia’s bandit economy.

From autumn 1996 to spring 1997, Vladimir Potanin was Russia’s First Deputy Prime Minister. Today, he is considered to be a close ally of Vladimir Putin who is wanted by the International Criminal Court in Haag for war crimes.