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Weak ruble saves nickel miners

Prices are low and production is down, but Norilsk Nickel's assets in the Kola Peninsula are still making good money.

Production is down and prices drop 40 percent in half a year. But Norilsk Nickel still keeps the margins.

Location

The company, the world’s biggest producer of the valuable metal, in 2014 had a four percent drop in production. In the Kola Peninsula, one of two production regions in Russia, the production decline was three percent, a company press release reads.

In total, the company in 2014 produced 274,247 tons of nickel, of which 106,048 in its facilities in the Kola Peninsula.

The lower production and the falling raw material prices would have been a dramatic mix for the company was it not for the major weaking of the ruble. In an interview, Norilsk Nickel CEO and majority owner Vladimir Potanin confirms that the lower metal prices will not affect the company’s earnings before interest, tax and depreciation (EBITDA) margin, which is likely to exceed 40 percent this year.

“The decline in nickel and copper is causing a revenue decline,” Potanin told journalists. “However, ruble depreciation is significantly compensating the price decline,” he added, the Moscow Times reports.

As displayed by data from Patchwork Barents, a regional data portal for the Barents Region, the 2014 nickel production in the Kola Peninsula is the lowest in more than a decade. In 2006, the company produced 122,000 tons in the region.

Norilsk Nickel is also a major producer of copper. In 2014, the company produced 57,4 thousand tons of copper in the Kola Peninsula, a decrease of 8 percent from 2013.

Regional subsidiary company Kola GMK operates mines and metallurgy plants in the towns of Monchegorsk, Zapolyarny and Nikel, the latter two located along the border to Norway and Finland.