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. Last Updated: 07/27/2016

Norilsk Predicts Profitable H2

Norilsk Nickel lifted its forecast for 2009 output and said it expects to turn a profit in the second half.

“Stocks are still high, but the increase has stopped. This and other factors say that things are going to be better,” chief executive Vladimir Strzhalkovsky said.

“Judging by current price levels, we expect a profit,” he said Wednesday.

In June, Strzhalkovsky said Norilsk had returned to profit in the first half of 2009 after its first ever loss last year.

Norilsk said full-year results will probably beat forecasts. The miner will post a full-year net income of $1.2 billion, according to the median of three analyst estimates compiled by Bloomberg. It lost $449 million in 2008.

In a separate statement Wednesday, Norilsk said it had also paid off a $500 million eurobond with a coupon yield for the settlement date amounting to $17.8 million.

Strzhalkovsky said Norilsk had not taken any new loans this year and did not rule out the possibility of acquiring more foreign assets, though he said he did not want to “repeat past mistakes.”

In 2007, Norilsk acquired Canadian nickel producer LionOre and a controlling stake in power generator OGK-3, which have lost value since.

Strzhalkovsky said world nickel inventories had stopped rising and expected Norilsk’s Russian assets to produce 231,000 to 232,000 tons of nickel in 2009.

Foreign assets would produce about 70,000 tons, giving a total of 301,000 to 302,000 tons — slightly above Norilsk’s previous forecast of 285,000 to 300,000 tons and compared with 299,721 tons in 2008.

“We will fulfill our production plan for 2009 and our Russian assets may even exceed it by 1 percent. We have set the same targets for 2010,” he said.

He said Norilsk aimed to raise volumes of metal sales to China and to develop relations with Brazil and Canada, but did not elaborate.

Norilsk Nickel also expects the government to resume a 5 percent duty on nickel exports from next year, Strzhalkovsky said.

“We expect the old duty to be reintroduced in 2010,” Strzhalkovsky said.

The government’s Commission for Protective Measures in Foreign Trade said Tuesday on its web site that Russia may impose a 5 percent nickel duty from Dec. 1.

Russia annulled the 5 percent duty and a 10 percent tariff on copper cathode, a finished form of the metal, in January after prices plunged. Metals have rebounded since then.

“Copper production costs are high and the government shouldn’t rush to reintroduce the tax,” Strzhalkovsky said.

(Reuters, Bloomberg)