Nornickel’s core earnings jumped 37% in 2021

The company was hit by lower output at two of its Arctic mines last year after flooding stopped production for several months. An accident at a processing plant last February also hampered production.

Its Oktyabrsky mine returned to full production capacity in the middle of May, but the Taimyrsky mine and Norilsk concentrator only did so in December.

Nornickel’s 2021 net profit stood at $6.97 billion, a 92% increase from 2020.

As well as higher metal prices, Nornickel said the 15% year-on-year revenue increase to $17.9 billion was due to the sale of palladium from inventories accumulated in 2020.

“(These have) positively offset production losses caused by industrial incidents in 1H21,” Nornickel said.

The company said it saw a global palladium market deficit at 300,000 oz in 2022 and a global nickel market surplus of 42,000 tonnes.

Nornickel’s operations have faced other problems in recent years. The company paid $2 billion for environmental damage from the leak of 21,000 tonnes of diesel into rivers and subsoil from a storage tank at its power plant in Norilsk in May 2020.

Late last year it was discussing an out-of-court settlement with the state fisheries agency, which sought damages of 58.7 billion roubles ($785.9 million) from the metals miner over that spill.

Nornickel said capital expenditure increased 57% in 2021 to a record $2.8 billion.

“Expenditures on capitalized repairs, improvement of industrial safety and modernization of core assets were up more than 40% exceeding $800 million,” the company said.

($1 = 74.6950 roubles)

(By Anastasia Lyrchikova, Gleb Stolyarov and Alexander Marrow; Editing by Jane Merriman)