Nornickel, a major Russian nickel and palladium mining company, is adjusting its strategy in response to Western sanctions by shutting down its Arctic copper plant in Russia and constructing a new smelter in China, according to Interfax.
The company’s decision to focus on the Chinese market reflects its effort to adapt to both the sanctions imposed on Russia and the changing preferences of buyers in Asia. The planned joint venture for the new copper plant is set to be operational by mid-2027 and will receive nearly 2 million tonnes per annum (mtpa) of copper concentrate.
As Asia, especially China, becomes a vital market for Russian commodities amid US sanctions stemming from Russia’s actions in Ukraine, Nornickel is realigning its operations. In 2023, 54% of Nornickel’s revenue came from Asia, with China playing a significant role in this shift.
In addition to the Chinese venture, Nornickel is exploring opportunities to enter the battery production industry. CEO Vladimir Potanin mentioned plans to utilize Russian lithium deposits and collaborate with the state nuclear corporation Rosatom in this sector.
Despite not being directly targeted, Nornickel’s revenue is currently at 80% of pre-sanctions levels, according to Potanin. He emphasized the need to address challenges related to environmental issues, market access, and customization of goods for consumers, which prompted the company to seek solutions in the Chinese market.
Potanin highlighted the importance of integrating into the Chinese economy to mitigate the impact of sanctions pressure, stating, “Being more integrated into the Chinese economy, we are more protected.”
The recent ban by the London Metal Exchange on Russian metal produced after April 13, in compliance with new sanctions from the US and UK, further underscores the challenges faced by Russian companies like Nornickel in the global market.
