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. Last Updated: 07/27/2016

Nickel Market Dismisses Closure News

World metals markets were rattled by unconfirmed reports that Norilsk Nickel had shut down indefinitely one of its plants, but industry analysts said any stoppage would be routine and that the Arctic giant actually stood to gain from a debt deal cut over the weekend.


A Norilsk Nickel spokesman in Moscow said he had no information about a Prime-Tass report Monday saying the Nadezhdinsky nickel-copper plant has shut down indefinitely. Norilsk has two other main plants, one handling just nickel, the other just copper.


Analysts, however, were unconcerned about the shutdown, calling it standard procedure.


"This is completely normal. They do this every year," said Julia Dawson, ING Barings' analyst covering Norilsk Nickel. "It's not going to impact overall production levels. If it were a labor dispute or something, that would be different. This was routine."


Reports that a major plant had closed at Norilsk Nickel, the world's largest nickel producer with 18 percent of world output, sent shock waves through global metals markets. The Nadezhdinsky unit produced 76,000 tons of nickel in 1996, compared with 177,185 tons for the entire Norilsk group, Reuters reported.


But Dawson said Norilsk Nickel had planned to shut down one of the furnaces at the Nadezhdinsky plant for relining as part of a maintenance program.


More damaging to production has been the shutdown of two smelters due to a fire this past summer, analysts said.


"They've still got two electric furnaces out of five that are shut down," said United City Bank metals analyst Grant Sinitsin.


Contrary to the concerns which rattled Monday's markets, analysts said Norilsk's future is looking brighter after cutting a deal over the weekend to settle up debts with its main local gas supplier.


Norilsk Nickel's flagship metals combine owed Norilskgazprom roughly 2 trillion rubles ($340 million), but reduced it to 1 trillion rubles in exchange for a promise to pay the debt, according to Norilsk spokesman Igor Plotnikov.


The debt settlement is just the latest sign of cooperation between two enterprises formerly locked in a litigious battle.Last month, a structure "close to Norilsk Nickel" bought about 30 percent of Norilskgazprom's outstanding shares, Plotnikov said. The structure, ULM Enterprises Limited, is a Cyprus-based and registered company.


At a Norilskgazprom shareholders meeting over the weekend, three officers from Norilsk Nickel were voted onto the gas company's 11-member board, Plotnikov said.


Those three are: Norilsk Nickel board member Lev Kuznetsov, first deputy general director Yevgeny Yakovlev and Johnson Khagazheyev, general director of the firm's heavy metals plant.


Norilskgazprom, an independent gas company whose only customer is Norilsk Nickel, also moved to drop a high-profile lawsuit it had filed against the metals giant over unpaid gas debts. The suit had prompted the regional Krasnoyarsk arbitration court to consider bankruptcy proceedings against the metals company.