Norilsk Nickel will end a four-year exploration joint venture with Rio Tinto Group and review a similar accord with BHP Billiton as it focuses on existing projects, deputy CEO Oleg Pivovarchuk said Tuesday.
“We’re exiting the venture with Rio,” Pivovarchuk said in an interview. “We have enough of our local concerns.”
The venture with Rio was established in 2006 to explore for iron-ore and copper in Siberia. Since then, the government has curbed foreign companies’ access to the country’s natural resources, Norilsk’s management was replaced following a shareholder dispute, and the company’s earnings shrank as commodity prices plunged.
“Norilsk has significantly cut its investments with the crisis, and new projects are not on the agenda,” said Denis Nushtayev, an analyst at Metropol. “They want to focus on modernizing their home facilities, which are not in the most up-to-date shape.”
Norilsk, the world’s biggest producer of nickel, is focusing on the development of mines close to its main Arctic operations, which are located on the Kola Peninsula and in the Taimyr region, Pivovarchuk said.
The Syradasaiskoye coal deposit in the Arctic, which is being explored in a venture with BHP, is under review because the project “lacks prospects in the short term,” he said.
Norilsk had planned to explore with BHP for nickel in the Krasnoyarsk region in Russia’s north, for diamonds in the Murmansk and Arkhangelsk regions and to examine Syradasaiskoye. A lack of infrastructure and the “massive” investment needed to develop the coal field has delayed work indefinitely on the projects, Pivovarchuk said.
Nick Cobban, a spokesman for Rio in London, said he couldn’t immediately comment. Illtud Harri, a spokesman for BHP in London, declined comment.
Norilsk plans to start exploration near its Botswana operations, where its deposits have as few as five years of mining life left, Pivovarchuk said. It expects results from exploration in Cuba by the end of the year, he said.
Norilsk is also making an “extra effort” to promote the use of palladium, for which it accounts for half of the world’s supply, Pivovarchuk said.
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