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. Last Updated: 07/27/2016

Norilsk, Interros Buy Fuel Firm for $241M

Metals giant Norilsk Nickel and industrial and banking group Interros on Tuesday announced a deal to spend $241 million on a major stake in a U.S. fuel cell company. While apparently years away from profitability, Plug Power could eventually provide a market for Norilsk's palladium exports, analysts said.

The two companies plan to secure 35 percent of the U.S. company through their 50-50 joint venture, Smart Hydrogen, which already owns 3.2 percent of Plug Power, Norilsk said in a statement on Tuesday.

Norilsk Nickel's board of directors will review the transaction in May, allowing the deal to be closed in June, the statement said.

"It's the right direction for Norilsk; it's something they probably should have done a few years ago," said Vladimir Zhukov, a metals analyst with Alfa Bank. "The only way for Norilsk to promote palladium is to invest in companies working with technologies that could use it," he said.

Norilsk is currently the world's largest producer of palladium and a major producer of platinum, which are both used by Plug Power in its fuel cells. Fuel cells provide expensive but reliable back-up power using hydrogen to produce emission-free electricity.

The deal is good news for Plug Power, said David Kurzman, who runs a clean-fuel hedge fund in the United States. "For them, it's good to have a commodity house on board as palladium and platinum represent one of the main cost inputs into fuel cell systems," he said, saying that they represented up to 25 percent of the company's production costs.

He said the deal should cover the company's development costs until the end of the decade.