Norilsk Nickel said on Wednesday it had partially suspended operations at its Oktyabrsky and Taimyrsky mines in Siberia because it had detected an inflow of water underground, sending shares of the Russian metals miner down more than 6%.
Nornickel is the world’s largest palladium producer, accounting for 40% of the globally mined metal, and one of the world’s largest nickel producers. It is also a major producer of copper and platinum. Ore from the two mines contains those four metals.
“Partial suspension of the Oktyabrsky mine was required as a preventive measure to ensure the safety of our employees,” Sergey Dyachenko, Nornickel’s chief operating officer, said in a statement.
The two mines account for 36% of Nornickel’s ore mined in Russia
“Operations at the Taimyrsky mine have also been partially suspended, since there are connected underground workings between the two mines, and water has found its way into this mine’s horizon,” he added.
Nornickel shares were down 6.6% in trading in Moscow, underperforming the benchmark index, which was down 1.4%. Prices of nickel and palladium were up in London trading.
The security of production and the Arctic environment at Nornickel have been in the spotlight since a major fuel leak at its power plant near the city of Norilsk and a number of smaller accidents in 2020 and 2021.
The company, which has a market value of $52 billion and is co-owned by billionaire Vladimir Potanin and aluminium producer Rusal, will assess the impact of the partial suspension on its production guidance once the situation is fixed, it added.
The water inflow was detected at a depth of 350 metres in the Oktyabrsky mine during tunnelling operations on Feb. 12. The company is now installing a barrier to stop further water inflow and then will deal with the accumulated water in the mine.
“We are doing our best to eliminate the flood as quickly as possible to minimise its impact on our production plans,” Dyachenko said.
The two mines account for 36% of Nornickel’s ore mined in Russia, analysts at Renaissance capital said in a note, adding that they were unable to quantify the severity of the incident at this point.
(By Polina Devitt and Anastasia Lyrchikova; Editing by Jan Harvey, Jane Merriman and Paul Simao)
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