The world’s largest producer of palladium, one of the largest producers of nickel, platinum and copper, Norilsk Nickel (Nornickel), is fully committed to the principles of sustainable development. Capital Markets Day, an event for investors, analysts and bankers—held online this year—agreed with the company’s precepts.
A strategy based on sustainable development can be formulated as follows: more environmentally friendly metals for the needs of the world’s green economy.
“We are aware of our role in the global transition to a green economy. In the automotive industry, we see the active use of all-electric and hybrid engines and understand how these modern trends will change the global industry. Clients will be the key to the company’s competitive advantage,” said Sergey Dubovitsky, head of strategy at Nornickel.
Earlier, Nornickel signed a letter of intent to establish a battery recycling cluster in Harjavalta, Finland, to serve the electric vehicle market in partnership with Fortum and BASF. This will successfully complete the “closed-loop” recycling cycle for critical metals present in used batteries.
Speaking to Anton Berlin, vice president of sales and distribution at Nornickel, he said that “we continue to see hybrids have higher sales than battery-powered electric vehicles. From an engineering point of view and a consumer point of view, hybrids can offer many benefits. It’s a combination of two drive trains, which complicates things, but as a consumer, you really need traction when accelerating so you can get great performance from a hybrid without using an expensive battery, expensive combustion engine or infrastructure in terms of charging, you are less dependent.”
“You can still use the car if the battery is low,” he continued, “We believe the environmental benefits are incredible. You get excellent fuel consumption and about five times less CO2 emissions, which is important for tackling climate change and moving towards a carbon-free economy. So, we still think they have a very good position. This is what car companies mostly talk about when they say their production line will be dominated by hybrids.”
Nornickel also noted that it sees no change in its markets. According to Berlin, the company’s largest export markets comprise the European Union, China and the United States. “And probably this will not change in the next ten years,” Berlin said.
As noted by the company, Norilsk Nickel also expects a shortage of palladium in the world market by 400,000 ounces in 2020.
Palladium is most needed in the automotive industry. Like platinum, this metal is used in catalytic converters (catalysts) that convert hydrocarbons, nitrogen oxides and other chemical compounds that are harmful to humans, contained in exhaust gases, into relatively harmless carbon monoxide and water vapor. Palladium and platinum act like a sponge, absorbing hydrocarbons. Palladium is capable of absorbing exhaust emissions 900 times its weight.
“We see our leadership role in the palladium market by providing long term security of supply and providing additional volumes required by the markets of the future. We do have a growth plan for palladium—up to 50% of production in the long run,” Sergey Dubovitsky said.
However, he noted some changes in transactions announced at a similar event last year.
“The deal that was reported at the previous Strategy Day is no longer on the table. As you may know from the press the deal had been blocked by Rusal. It looks like that the colleagues had made an incorrect judgment call as they regretted it and publicly acknowledged that the reversion to this deal could be of interest for the company. But the deal is no longer valid as the partners from Russkaya Platina are no longer ready to progress further under the same terms and conditions,” Dubovitsky said.
According to the company’s forecast, the deficit in the platinum market may amount to 100,000 ounces. According to Norilsk Nickel’s forecast, the nickel market may have a surplus of 108,000 tons, copper— 180,000 tons. In August of this year, the company expected a balance between supply and demand in the palladium market at the end of 2020, and a surplus of 700,000 ounces was expected in the platinum market.
Next year, the palladium market is expected to balance between supply and demand, and the platinum market will have a surplus of more than one million ounces. The surplus on the nickel market may exceed 75,000 tons, copper—more than 340,000 tons.