Facing challenges in importing equipment to sanctions-hit Russia, Nornickel has announced plans to close its Arctic copper plant and establish a new facility in China in collaboration with an undisclosed partner. The move aims to secure direct access to the world’s largest metals market and adapt to shifting buying preferences in Asia, Nornickel’s primary sales destination. The project represents a significant strategic shift for Nornickel, which has traditionally focused on selling refined copper for use in power and construction.
In an interview with the Interfax news agency, Nornickel’s CEO, Vladimir Potanin, emphasized the company’s intent to transfer environmental, settlement, and market access challenges to China, where they can be addressed more effectively. The company plans to establish a joint venture in China to construct the new plant, with an expected completion timeline by mid-2027. The plant is projected to be supplied with approximately 2 million metric tons of copper concentrate annually.
Nornickel’s decision comes at a time when China’s copper imports declined by 6.3% in 2023 due to increased domestic production, while imports of copper ore and concentrate reached a record high. As the United States imposed sanctions on Russia following its military intervention in Ukraine in February 2022, Russian companies have increasingly turned to Asia, with the region accounting for 54% of Nornickel’s revenue in 2023.
Potanin highlighted the importance of integrating further into the Chinese economy as a means of enhancing protection against escalating sanctions pressure. Additionally, Nornickel aims to collaborate with other partners to venture into battery production, utilizing Russian lithium deposits and partnering with state nuclear corporation Rosatom for this purpose.
However, a joint project with German chemicals group BASF in Finland has been put on hold, with BASF citing permitting issues from Finnish authorities and initiating layoffs at the site.
This strategic shift by Nornickel underscores the company’s proactive approach to navigating geopolitical challenges and capitalizing on opportunities in the global metals market.