Hints closure of mega-polluter

Norilsk-Nickel might stop processing nickel matte in 2015 at the smelter in Nikel near the border to Norway. Photo: Thomas Nilsen

Norilsk-Nickel might stop processing nickel ore on the Kola Peninsula in 2015 and only process nickel matte from Norilsk at the company’s plant in Monchegorsk. The reason is a sharp drop in global nickel prices.


The board of directors in Norilsk-Nickel last week issued a directive to prepare for reduction of investment expenses following the latest falling prices of nickel.

Head of the company’s exploration department Oleg Smirnov says in an interview with Interfax on Tuesday that it is quite possible that by 2015 processing ore from Kola will become unprofitable.

Smirnov will not specify the nickel price at which processing of nickel ore in the Murmansk region would be unprofitable, but says if the current trend of falling prices continues, the ore processing on the Kola Peninsula might be halted from 2015.

Metal prices drop
Nickel prices have gradually declined since the end of 2011, when it reached $25,000 per ton. The price today is $16,515 per ton.

The production of nickel matte at the smelter in the town of Nikel, close to the Norwegian border, is based on ore from Zhdanovskoye deposit in Zapolyarny, some 25 kilometers east of Nikel. The quality of ore from these mines is declining. The nickel grade in the ore from Zhanovskoye is three times lower than that of the mines in Norilsk on the Taimyr Peninsula. Also; the ore outside Zapolyarny does not contain copper and platinum.

As earlier reported by BarentsObserver, Norilsk-Nickel wanted to feed the smelter in Nikel with ore from a new deposit in the region of Voronezh. But on Monday this week the company announced that it drops all plans to take part in the development of copper-nickel deposit in Voronezh.

Nickel ore from Voronezh was supposed to compensate for the falling quality of local ore from Kola.

“If the problem of providing Kola with normal ore is not resolved, it is likely that (Kola enterprises) will only deal with processing of copper- and nickel matte from Norilsk,” says Oleg Smirnov in the interview with Interfax.

Today, the plants in Monchegorsk on the Kola Peninsula process both matte from Norilsk and Nikel. The matte from Norilsk is shipped to Murmansk from the Arctic port of Dudinka on the Yenisei River. From Murmansk the matte is transported to Monchegorsk by rail.

Switch to copper
With the possible lapse of nickel matte from the smelter in Nikel the plants in Monchegorsk get free capacity. Norilsk-Nickel has already begun converting part of the plants in Monchegorsk to production of cobalt. The Moscow Times reports that Norilsk-Nickel is investing about 2 billion rubles in a process on the Kola plants that could begin producing high-grade electrolytic cobalt in 2015.

Last year, the Kola division of Norilsk-Nickel mined more than 8 million tons of nickel ore, while the metals output was 113,000 tons of nickel and 60 tons of copper, the company’s portal reads. Metal output from Monchegorsk was a result of both matte from Nikel and Norilsk.

Social challenge
A production stop at the smelter in Nikel will cause an enormous social challenge for the population in the town that by definition is a so-called monogorod, or company town.
There are some 14,000 inhabitants in Nikel and few alternative jobs available.   

The environment would however benefit from a halt in production. The plant annually pollute the fragile arctic environment in the Norwegian, Russian border areas with more than 90,000 tons of sulphur dioxide and loads of poisoning heavy metals.

The large-scale pollution has for decades been a thorn in bi-lateral relations between the two countries.