The Russian war has not affected Nornickel Harjavalta’s productivity, and it maintains plans to expand its capacity.

Norilsk Nickel produces about five percent of the world’s pure nickel production at Harjavalta, and about a quarter of its production goes to the electric car industry. Photograph: TONY ÖHBERG/FINLAND TODAY

Nornickel Harjavalta, which processes Russian raw materials, is owned by the giant metals and mining group whose largest owner is Vladimir Potanin. The Russian war has not affected the Finnish plant’s productivity, and it maintains the plans to expand its capacity, the Finnish economic publication Talouselämä reported on July 6, 2022.

Finland seeks to get rid of Russian oil, but nickel imports have not been affected by the war.  Because of this, nickel has overtaken oil as the largest Russian import product by value, according to the publication.

In April, the value of nickel and nickel products imported from Russia was 72% higher than in April 2021. Nickel imports increased by volume as well.

The main consumer of raw materials in Finland is the Nornickel Harjavalta nickel refinery, part of the Russian Norilsk Nickel Group. Norilsk Nickel’s revenue in Finland last year was about €1.5 billion.

Production volumes this year remained at last year’s level, says Joni Hautojärvi, CEO of Nornickel Harjavalta, in a comment to Talouselämä. “There was a brief interruption in raw material shipments in spring, but now they are operating normally.”

Raw materials are shipped from Russia to Finland by rail. Nickel imports are likely to increase in the future, Talouselämä writes, as the Harjavalta factory plans to expand production according to a plan it announced last year.

“As part of the expansion investment, we are increasing production of nickel chemicals used in electric car batteries,” Hautojärvi said.

The European industry needs these chemicals because the production capacity of lithium-ion batteries for electric vehicles will increase to about 400 to 500 gigawatt hours by 2030, according to the European Battery Alliance.

This will require about 200,000–300,000 more tons of nickel production in the short term.

This is probably one reason why nickel cargoes are transported normally, and nickel is currently excluded from European Union sanctions.

The Harjavalta factory is important for the parent group.

Norilsk Nickel produces about five percent of the world’s pure nickel production at Harjavalta, and about a quarter of its production goes to the electric car industry.

“The investment in the plant’s expansion consists of two phases. The first phase will increase nickel production from the current 65,000 tons to 75,000 tons. This should be realized as early as next year,” said Hautojärvi. “The first phase will remove bottlenecks in production, and the second phase will expand current operations.”

Read also:  Harjavalta's Expansion Project on Track Despite Sanctions Against Russia’s Potanin

The Norilsk Nickel Group is a giant, producing a fifth of the world’s battery-grade nickel supply and 40% of palladium supply.

In phase two, production will increase to more than 100,000 tons, which is double the current level. To do this, the company must apply for a new environmental permit. An environmental impact assessment procedure is currently underway, Talouselämä writes. “It takes at least a year to obtain a permit.  The final investment decision will be made after the permit,” said Hautojärvi.

There is a risk that sanctions could affect our operations, the factory manager added.

Vladimir Potanin is the largest owner of the Norilsk Nickel Group. For now, he remains outside the sanctions imposed by both the European Union and the United States, but the UK has imposed sanctions on him. Norilsk Nickel, dubbed “too big to sanction,” has not been affected.

In spring, Potanin acquired several assets. His holding company Interros picked up Rosbank and a stake in one of Russia’s largest retail lenders TCS Group, among other assets.

Norilsk Nickel acquired the Harjavalta plant in 2007. Since then, about €300 million have been invested in the factory. “The investment was made from Harjavalta’s own income,” said Hautojärvi.

The price of nickel remains record high because of the expected surge in demand for the metal needed to make batteries for electric cars.

The capacity to mine and process critical minerals globally is concentrated in even fewer hands than oil and gas. The Norilsk Nickel Group is a giant, producing a fifth of the world’s battery-grade nickel supply and 40% of palladium supply.

The European industry’s dependence on the group is even greater.

Norilsk Nickel accounted for about 27% of Europe’s nickel imports last year, according to consulting firm Wood Mackenzie.

If this flow to the west stops, the price of nickel is likely to rise sharply, Talouselämä writes. This, in turn, would complicate the massive investments in battery plants planned for the EU region, as well as the tightening of the EU’s zero-emission goal for new cars, the Finnish publication said.

The production of gasoline and diesel vehicles in the EU is expected to end by 2035.

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