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Nornickel in talks with China Copper for copper smelting venture in China

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Russian mining giant Nornickel is reportedly in discussions with China Copper to establish a smelting facility in China. This joint venture aims to relocate Nornickel’s entire copper smelting operations to China, aligning production closer to where the majority of its copper is consumed.

If this plan materializes, it would represent Russia’s first major relocation of a domestic plant following bans imposed by the US and UK on metal exchanges accepting new aluminium, copper, and nickel from Russia. In April, Nornickel announced intentions to shutter its Arctic facility and construct a new plant in China alongside an undisclosed partner.

Executives from China Copper, a subsidiary of Chinalco, the world’s largest aluminium producer, visited Moscow in June to explore the joint venture. Details regarding structure and investment are still being negotiated, with sites in Fangchenggang, Qinzhou (Guangxi region), and possibly Qingdao (Shandong province) under consideration.

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Sources indicate a decision on the joint venture is expected in the coming months, with Nornickel likely to cater its Chinese output for domestic consumption. The proposed facility is slated to have an annual copper production capacity of 450,000 tonnes, which would constitute approximately 2% of this year’s estimated global mined copper supply of 22 million metric tons.

Despite not facing US or European sanctions, Nornickel’s metal sales are hindered by Western reluctance to purchase Russian-origin metals since the Ukraine conflict erupted. Previously, a significant portion of Nornickel’s metal inventory was stored on the London Metal Exchange (LME), where new restrictions now prevent storage of Russian copper produced after April 13.

China Copper emerges as the primary interested party for the joint venture due to its direct ties with China’s central government, facilitating crucial decision-making involving foreign partnerships. While Nornickel approached other Chinese state-owned copper producers, concerns over provincial government jurisdiction and perceived risks in foreign collaborations posed hurdles.

Nornickel projects that the new plant will be operational by mid-2027, leveraging an annual supply of approximately 2 million tons of copper concentrate from its operations. With China accounting for over half of global copper consumption, particularly in industries like power and construction, concerns about global copper supply have intensified amidst growing demands from renewable energy and electric vehicle sectors.

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