Faced with growing difficulties imposed by Western sanctions, the Russian metal giant responds by relocating its activities and expanding into new markets

by Marco Arezio

Norilsk Nickel, the Russian metals giant, has not yet fully surrendered, but pressure from Western sanctions is significantly affecting its operations, prompting the company to relocate some of its copper production operations to China.

Vladimir Potanin, CEO and majority shareholder, openly admitted in an interview with Interfax that this move is a direct response to the difficulties caused by the sanctions, including payment issues, refusal of supplies, and discounts imposed on their metals.

Despite not being directly affected by specific sanctions, Nornickel has seen a 20% reduction in its revenue since the outbreak of war in Ukraine, an increase in the cost of debt and financial transaction fees, compounded by complications related to recent US restrictions.

The company is also experiencing problems in acquiring equipment and spare parts and can no longer rely on Western technologies and know-how, which has led to the postponement or cancellation of significant projects, including environmental ones such as reducing carbon emissions. sulfur dioxide in the Arctic.

Past development plans, such as a deal with Techint in 2012 for a plant in Norilsk and a project with BASF in 2018 for a battery factory in Finland, have been abandoned or halted. Now, with new restrictions preventing the sale of their metals through the London Metal Exchange and Comex from April 13, the situation has gotten even worse.

In response, Norilsk is intensifying its ties with China, where it plans to build a new copper smelter by 2027 and upgrade its port infrastructure and icebreaker fleet in cooperation with Rosatom.

Potanin emphasizes that relocating to China will allow it to more effectively address environmental, payment and market problems. Furthermore, he anticipates further expansions in China's battery sector, supplying nickel, cobalt and lithium, aiming for access to advanced technologies that will benefit both Russia and its partners in the long term.