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. Last Updated: 07/27/2016

Central Bank, Norilsk Nickel Agree on Palladium Exports




The world's largest palladium producer Norilsk Nickel said Tuesday it had agreed with the Central Bank to coordinate policy on selling the metal, in a move analysts said should stabilize the market.


"I hope the Central Bank will not consider this a disclosure of confidential information, but there is a good mutual understanding between the bank and Norilsk. We have, in effect, agreed our trade policy on the international palladium market," Norilsk chairman Yury Kotlyar said in a statement.


The statement gave no concrete details beyond saying the agreement aimed to ensure an uninterrupted flow of palladium to the market. Russia supplies 70 percent of the world's palladium.


But a Norilsk spokesman said the agreement was an informal deal on common principles, rather than a specific written document signed on a given date.


The spokesman added that the statement had been released in the light of recent press reports saying the Central Bank had moved large volumes of palladium abroad to use as collateral.


Kotlyar said the announcement was being made to counter media reports that Russia could not guarantee stable deliveries of palladium, which were "knowingly false."


"This agreement was made following the rumors that the Central Bank placed a large amount of palladium as a collateral for a loan with German banks," said Oleg Timchenko, metals analyst with United Financial Group in Moscow.


"People were afraid that this was not used as a collateral but rather sold. This may have destabilized the market."


He said an agreement with the Central Bank, one of only three holders of palladium along with Norilsk itself and the state precious metals reserves, Gokhran, should prevent the bank acting independently "and disrupting the market because the government or the bank urgently needs cash."