Nickel Ni Commodity markets Strategic report Nornickel 2022 Annual Report

Moody’s upgraded Nornickel’s credit rating to Ваа3 (investment grade) and raised its outlook to positive. The Company’s credit ratings from all the three international rating agencies (Fitch, Moody’s and S&P Global) currently qualify as investment grade. WWF Russia named the Company among the country’s top 10 environmentally responsible mining companies releasing its first-ever rating of the Russian miners and their impact on the environment and biodiversity. Precious metals produced by Nornickel are refined under tolling agreements at Krastsvetmet, Urals’ Innovative Technologies and Prioksky Plant of Non-ferrous Metals.

Unless otherwise specified or required by the context, the terms “Company”, “Group”, “Nornickel” or “the Group companies” shall mean Norilsk Nickel Group. Quantitative indicators for certain areas of sustainable development pertain to the Group’s specific operations in accordance with the Scope of Data Collection appendix. In 2018, the Company accounted for 0.7% of  Russia’s GDP, 2.6% of the national industrial output, 11.4% of metals production, and 2.6% of Russia’s exports. Nornickel and the Government of the Murmansk Region have agreed to partner in implementing local investment and social projects. The relevant memorandum was signed during the St Petersburg International Economic Forum by Andrey Chibis, Governor of the Murmansk Region, and Sergey Dubovitsky, Senior Vice President for Strategy, Strategic Projects, Logistics and Procurement at Nornickel.

Nornickel’s shares are listed on the Moscow Exchange and are included in its Blue Chip Index. As of the end of 2021 its American Depositary Receipts (ADRs) traded on the US OTC market, as well as on the London, Berlin, and Frankfurt exchanges (OTC sections). Indonesian NPI production continued to grow year-on-year, becoming the key driver behind the low-grade nickel supply growth in 2022.

Meanwhile, the high-grade nickel market remained in deficit, particularly as nickel inventories halved in 2022. Nornickel’s strategic goal is to achieve leadership in transitioning to the future green economy and in sustainability. This means not just full compliance with all national technical and legal requirements but also meeting the highest global environmental, industrial safety and climate change management standards. The Talnakhskoye Field, the world’s largest deposit of copper-nickel ores, was discovered giving a new lease of life to Norilsk Plant. The Trans-Baikal Division mines gold-iron-copper ores of the Bystrinskoye deposit through open-pit mining at the Verkhne-Ildikansky and Bystrinsky-2 mines. 2019 was another year of growing palladium prices due to the steady increases in consumption from the automotive industry amid tougher environmental standards worldwide.

  1. In 2018, the Company accounted for 0.7% of Russia’s GDP, 2.6% of the national industrial output, 11.4% of metals production, and 2.6% of Russia’s exports.
  2. These semi-products are processed at the chemical and metallurgical shop to produce precious metal concentrates.
  3. The overall decline in output was offset by the growing demand for Indonesian NPI, the preferred nickel feedstock for integrated stainless steel producers in China, the world’s largest producer accounting for nearly 60% of global steel output.
  4. The forum participants discussed whether the domestic industry sector had sufficient capacities to meet the needs of Nornickel and Russia’s other large businesses for supplies and equipment.
  5. 2022’s leading producers of high-grade nickel were Nornickel, Jinchuan, Glencore, Vale, BHP, and Sumitomo Metal Mining (SMM).
  6. At the same time, sales in Europe rose only by 11% y-o-y and even declined for some months, reflecting the increasing cost of living and the pressure on consumer savings as well as the rising expenditure on energy and soaring inflation.

The field stretches from north to south along the Norilsk-Khatanga Fault and includes its graben and the adjacent intrusions from the east.[45] The primary development facilities are the Mayak, the Komsomolsky, and the Skalisty mines. Another key objective of the strategy is the ongoing Sulphur Project 2.0, aimed at driving a 10x cut in sulphur dioxide emissions in Norilsk by 2025, achieving net zero in the Russia—Norway border area, and securing a 7x drop in emissions at Kola MMC in 2021. Nornickel’s business model is attractive thanks to a rich resource base with a high content of all key metals in the ore, and low cash cost vs peers. Amid the global economic recovery after the 2020’s recession, the global demand for metals was increasing in 2021, which had a positive impact on Nornickel’s operational and financial performance. In addition to geology, energy, logistics, and support businesses, the Group comprises Gipronickel Institute, an R&D facility based in St Petersburg with branches in Norilsk and Monchegorsk. For the purposes of the 2018 Sustainability Report (the “Report”), Norilsk Nickel Group shall refer to MMC Norilsk Nickel and the entirety of operations forming Norilsk Nickel Group.

Nornickel is the leader in Russia’s metals and mining industry and one of the world’s largest metal producer.

Norilsk Concentrator processes all disseminated ores from the Norilsk-1 deposit, cuprous and disseminated ores from the Oktyabrskoye and Talnakhskoye deposits, and some metal-bearing products from Talnakh Concentrator to produce nickel and copper concentrates. Its key processing stages include crushing, milling, flotation, gravity concentration, and thickening. In 2022, Norilsk Concentrator increased its ore processing to 7.7 mln t, up 1.3 mln t year-on-year. The resulting thickened concentrates from Talnakh Concentrator and Norilsk Concentrator are transported via slurry pipelines to the metals operations of the Norilsk Division for further processing. Talnakh Concentrator processes high-grade, cuprous and disseminated ores from the Oktyabrskoye and Talnakhskoye deposits to produce nickel-pyrrhotite and copper concentrates, as well as metal-bearing products. Nornickel is Russia’s leading metals and mining company, the largest palladium and high-grade nickel producer in the world, and a major producer of platinum and copper.

Key areas of cooperation with the Krasnoyarsk Territory

However, its growth rates slowed down slightly year-on-year due to both conversion of some furnaces to high-grade matte production and softer demand for stainless steel as well as skilled labour shortages in Indonesia. In addition, strict COVID regulations and more expensive airline tickets made travelling to these projects less attractive for Chinese workforce. Overall, we estimate the total 2022 NPI production in Indonesia at 1.1 mln t (up 33% y-o-y). At the same time, primary nickel demand in the stainless steel sector stayed flat at about 2 mln t in 2022. The overall decline in output was offset by the growing demand for Indonesian NPI, the preferred nickel feedstock for integrated stainless steel producers in China, the world’s largest producer accounting for nearly 60% of global steel output.

This led to a lower share of demand for scrap, i.e. secondary raw materials, and a corresponding increase in use for primary nickel. This was accompanied by a substantial decline in production in Europe and the US due to sluggish end use demand and rising energy prices, which translated to a jump in production costs. Production was also stagnant in other countries around the world (Japan, South Korea, Taiwan). India was the world’s only country that ramped up its stainless steel output by launching new production capacities, with its output up 1%. In 2022, total ore production by the Norilsk Division was 18.4 mln t, up 1.0 mln t y-o-y (+6%). High-grade ore production increased by 22% (+1.3 mln t), while production of cuprous ores decreased by 4% (–0.2 mln t).

Production chart

The production of nickel cathodes at Tankhouse 1 and Tankhouse 2 also generates primary cobalt cake, which is used by the cobalt section to produce saleable cobalt concentrate and cobalt cathodes. The produced nickel concentrates, including steam-cured sulphide concentrateHydrometallurgical product. The matte produced in flash smelting furnaces is then converted into high-grade converter matte. This increase was driven by the massive growth in the Indonesian NPI capacities (to 1.15 Mt Ni, or up 33% y-o-y) and the continued underlying growth of nickel compounds for the EV batteries sector, mainly fuelled by the launches of new HPAL capacities and NPI-to-matte conversion lines. In April, Nornickel completed an unprecedented operation, having installed the first heat exchangers on the site of the Sulphur Project, the Company’s flagship environmental programme. All in all, the Company built 28 installations over a year to make a single sulphuric acid neutralisation facility.

Production

With support from the Ministry of Industry and Trade of the Russian Federation, Nornickel established IN’HUB, a platform for inventors and innovators that will help set up a new global innovation centre in association with international partners. In December, the Russian Government approved a comprehensive nornikel development plan for Norilsk. In line with the document, a total of RUB 120 bn will be allocated to the city until 2035. Nornickel launched Ust-Khantayskaya HPP following an upgrade, which became one of the stages of a programme to modernise energy infrastructure of the Norilsk Industrial District.

This is yet another step in Nornickel’s comprehensive environmental programme designed to significantly reduce the environmental impact of all its production sites. The concentrator produces nickel sulphide concentrate, which is then sold via third parties or partially shipped to the Norilsk Division for further processing. In 2022, the concentrator processed 7.0 mln t of ore, down 0.1 mln t year-on-year https://g-markets.net/ due to a decrease in ore production. High-grade nickel is produced in the form of nickel cathodes, briquettes, pellets and powder, rondelles, and other small shapes, as well as chemical compounds, both from sulphide and from more common and available lateritic raw materials. 2022’s leading producers of high-grade nickel were Nornickel, Jinchuan, Glencore, Vale, BHP, and Sumitomo Metal Mining (SMM).

For comparison, it is about 10% of the Greater London’s current total electricity consumption. Moreover, this waste will require haulage resulting in nearly 40 million litres of diesel consumption, too. In 2022, the expansion of HPAL capacities launched by Lygend and PT Huayue Nickel and Cobalt in 2021 as well as the launch of a new PT QMB New Energy Materials asset drastically increased total MHP output in Indonesia compared to 2021, approaching 100 kt. Huayou’s fourth project, PT Huafei, is expected to be brought online in 2023, accompanied with the expansion of existing capacities, which will further boost MHP output.

On the other hand, a number of producers in New Caledonia, Brazil, the Dominican Republic, and Colombia were able to ramp up their output and deliver consistent performance. The surplus in the low-grade nickel market resulted in significant discounts for FeNi and accumulation of its stocks. Nornickel boasts a world-class resource base that is unique in many ways, including the amount of valuable minerals in ores, their high content and extensive reserve life. In 2021, the mineral resource estimate was updated, resulting in an increase of total reserves and resources by 225 mln t of ore. The growing popularity of electric and hybrid cars, along with the evolution of cathode technology towards nickel-intensive types, add to the tailwinds for significant growth in primary nickel demand in batteries in the long run. Despite the mounting competition across technologies, high-nickel formulations will remain the preferred option for automakers owing to their higher energy density, longer range and better recyclability.

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