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. Last Updated: 07/27/2016

Platinum Exports Secured as Russia Repeals Quotas

Russia's removal of precious-metal export quotas will eliminate the threat of supply disruptions from Norilsk Nickel, the world's largest palladium miner, industry officials and analysts said Monday.

The scrapping of export quotas clears the way for Norilsk to continue shipments after the Dec. 31 expiration of a five-year quota on platinum, rhodium and ruthenium, while also removing a barrier to Russia's entry to the World Trade Organization.

"It's good news for Norilsk Nickel. It removes the bureaucratic red tape and any possibility that delays in renewing quotas will happen in the future," Deutsche UFG metals and mining analyst Olga Okunyeva said.

President Vladimir Putin has signed a decree allowing unlimited exports of platinum group metals, or PGMs, uncut diamonds and other metals and ores subject to an Economic Development and Trade Ministry license.

Previously, long-term quotas were set. As well as the expired five-year platinum quota, Norilsk has a 10-year quota to export palladium that expires in 2008. The company does not disclose the volumes of these quotas.

"We consider this news positive for Norilsk Nickel, for which PGMs account for 20 percent of total revenues," Alfa Bank said in a research note.

Norilsk accounts for 12 percent of the world's mined platinum and more than half its palladium, a metal used in jewelry and vehicle exhausts that rose 30 percent in value last year. Market sources said platinum exports had not been disrupted by the lapse in the quota at the end of 2006.

"The company continues to carry out export activity and fulfill its production obligations to customers," Norilsk's press service said. Norilsk called the removal of quotas a "very important and positive step toward the full liberalization of the precious metals market, which until now has remained one of the most conservative and was regulated as it was in Soviet times."

Although no longer subject to quotas, all Russian PGM exports will continue to be booked through state diamond trader Almazyuvelirexport. "This hasn't changed," said Sergei Gorny, the state trader's deputy general director.

"The system existed under Soviet rule and afterward. All platinum group metals sold abroad, irrespective of where they're produced -- and we have several producers, though none as big as Norilsk -- are exported through our group by law," Gorny said.

"It's the eradication of one of the last bits of Soviet-era legislation, which makes for a more transparent market," said Rob Edwards, director of mining and metals research at Renaissance Capital. "It's strongly linked to the WTO. You can't have a WTO member pulling strings on precious metals exports, particularly on platinum and palladium, which don't have a wide liquid market and where Russia features very highly in terms of world supply."