Nornickel says palladium output may fall in 2018

Norilsk Nickel, the world's largest palladium producer, said on Wednesday its production of palladium could decline in 2018, while the output of nickel from Russian raw material would remain flat.

Nornickel, part-owned by Russian tycoon Vladimir Potanin and aluminium giant Rusal, previously said its production of nickel and platinum group metals would be unchanged with rising copper output in 2018-2020.

"We reiterate our earlier 2018 metal production guidance,with a small downside risk to platinum group metals volumes owing to a potential build-up of work-in-progress material at Kola division due to ongoing nickel refinery upgrade," Sergey Dyachenko, Nornickel COO, said in a statement.

The company completed the main phase of its downstream reconfiguration programme in 2017 and plans active modernisation and expansion of capacity at its Kola nickel refining operations in 2018.

Nornickel, which competes with Brazil's Vale SA for the rank of the world's top nickel producer, experienced a fall in consolidated production of nickel as its reconfiguration led to a reduction of low-margin processing of third parties' feed at Norilsk Nickel Harjavalta in Finland.

Its output of copper and platinum group metals rose in 2017 mainly due to the processing of concentrate it previously purchased from state conglomerate Rostec.

This year Nornickel plans to produce from Russian feedstock 210 000 t to 215 000 t of nickel, 400 000 t to 420 000 t of copper, 2.6-million to 2.7-million troy ounces of palladium and 600 000 oz to 650 000 oz of platinum.

In 2017, consolidated nickel production was 217 112 t, down 8% year-on-year, and consolidated copper output was 401 083 t, up 11%. Its palladium and platinum production was 2.8-million ounces, up 6%, and 670 000 oz, up 4%, respectively.

Nornickel's production in 2017 and production guidance for 2018 from Russian feedstock, excluding its Bystrinsky copper project:

In 2018, Bystrinsky plans to produce 35 000 t to 40 000 t of copper and 180 000 oz to 200 000 oz of gold in concentrate.

Nornickel owns a 50% stake in the project.