Saved by the ruble

Industrial giant Norilsk Nikel and other metallurgy companies cash in on a weak ruble.

Raw material prices plummet, but Russian mining and metallurgy companies still boost profits.


Prices on key minerals and metals are on the lowest level since the years 2009-2010. That however has not taken down the raw material-dependent Russian economy. Figures from the biggest industrial companies in the country on the contrary show that profits are solid.

The reason is the weak ruble. Over the last year, the Russian currency has been stable at levels over 60 to the euro, far beyond the value of former years.

On August 24, the ruble dropped to 83 to the euro, the lowest level since the record-low 85.65 of 16th December 2014.

The currency collapse has saved the industrial companies from a potential major crisis. Before the ruble started to tumble in 2014, the companies` revenues declined dramatically as global raw material prices started to drop. Those low prices has since haunted the world’s heavy industry. 

Triggered by lower Chinese demands, the iron ore price had by 31 July fallen to $52 per tonne, a historical low, and nickel by mid August to $9300 per tonne, a decline of 40 percent since the start of the year.

Despite that, Russian companies like Severstal and Norilsk Nickel are making good money. Severstal in the first half of 2015 increased gross profits by 9,2 percent to a total of $1,5 billion, newspaper Vedomosti reports.

Also Norilsk Nickel, the world’s biggest nickel producer, will be able to record major profits in 2015. According to the newspaper, the nickel company is expected to get revenues amounting to $10.2 billion and a net profit of $4,7 billion.

Most of the major Russian mining and metallurgy companies are represented in the Russian part of the Barents Region. As illustrated by Patchwork Barents, the regional data portal, nickel production has over the last years dropped while iron ore mining has remained stable.