Beyond 2024, nickel prices to increase steadily to 2028: Fitch
Analyst expects upside risks – including but not limited to potential supply disruptions and a weakening of the US dollar to place a floor under prices throughout the year.
Russian metals producer Nornickel said on Friday its 2023 net profit slumped by 51% to $2.9 billion as prices for nickel, palladium and copper fell, though sales of previously accumulated inventory partly offset the negative factors.
Geopolitical risks have also hampered Nornickel, the world’s largest palladium producer and a major producer of refined nickel, and made Asia Nornickel’s largest sales market with a share of more than 50% for the first time in its history.
“The year 2023 was marked by a slump of metal prices and a lingering external political pressure on Russian business that affected our financial results,” CEO Vladimir Potanin said in a statement.
“The company managed … to sell all metals produced in the reported period by redirecting sales to friendly countries,” he added.
Potanin said last year that Western sanctions on Russia in response to the conflict in Ukraine had constrained Nornickel’s development, though the measures have not targeted the company directly.
Full-year revenue fell 15% to $14.4 billion, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell 21% to $6.9 billion.
Last week, Nornickel said it expected a further decline in its nickel and palladium output this year, due to geopolitical risks and postponed furnace repairs, following a drop in production in 2023.
Capital expenditure (capex) fell 29% in 2023 to $3 billion, partly due to the “rescheduling of investment projects owing to voluntary self-sanctions imposed by foreign suppliers of equipment and technologies”, Nornickel said.
In 2024, capex is seen at $3-3.2 billion, it said in a presentation.
As Nornickel redirects part of its sales towards Asia, “borrowing in Chinese yuan is a priority for the company at the moment,” its chief financial officer, Sergey Malyshev said.
The company had free cash flow of $2.7 billion in 2023, which once adjusted for debt servicing and other factors would leave only $1.4 billion for possible dividends, exceeding its January interim payments, Malyshev said, adding the final decision on full-year 2023 dividends would be up to the board of directors.
(By Anastasia Lyrchikova, Alexander Marrow and Polina Devitt; Editing by Jason Neely and Mark Potter)
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