Russian nickel and palladium mining giant Nornickel saw its 2024 net profit drop by 37% to $1.8bn (Rbs172.51bn) as Western sanctions and weak metal prices hit earnings.
Revenue fell by 13% to $12.5bn due to lower nickel and platinum group metals (PGM) prices, while earnings before interest, taxes and amortisation (EBITA) declined by 25% to $5.2bn amid reduced revenue and full-year export duties.
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Nornickel president Vladimir Potanin said: “Our business as part of Russian economy remains under significant external pressure. Sanctions and restrictions as well as falling prices of our key metals continued to weigh on our revenue, profitability and ability to generate cash flow.”
Despite not facing direct Western sanctions, Nornickel has been impacted by Western measures, leading some buyers to avoid Russian metal.
Furthermore, complicated payments and limited access to Western equipment has shifted sales to Asia, reported Reuters.
Nornickel reduced cash operating expenses by 3% and curbed net working capital growth, reversing a trend of stock accumulation in recent years.
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By GlobalDataNornickel CFO Sergei Malyshev said: “In the context of ongoing volatility in commodity markets and high geopolitical risks, our absolute priority is to maintain the company’s financial stability, enhance operational efficiency, and invest in future markets and products.”
The company reported a global nickel surplus of 150,000 tonnes (t) in 2024, primarily driven by high-grade nickel from China. It expects the surplus to remain at similar levels in 2025.
The global palladium market remained balanced as weaker automotive demand caused by loadings optimisation and sluggish production was offset by lower recycling.
The company anticipates a continued market balance in the short term, with declining PGM mine output in North America and South Africa counteracting stagnant demand.
Potential demand growth could emerge from interest rate cuts in the West, a softer US electrification push under new leadership and economic stimulus measures in China.
The company’s copper outlook sees a crucial role played by China in reigniting demand.
According to the company: “Monetary policy easing, a new wave of industrialisation in the West sparked by the return of the Trump administration, together with additional economic support measures in China are expected to support demand. On the other hand, weak macroeconomic signals and potential consequences of new trade wars could undermine the growth of metal use. Much will depend on China’s ability to reignite demand with new economic stimuli.”
Nornickel has adapted to supply disruptions caused by Western sanctions, which impacted equipment deliveries for furnace repairs at its Nadezhda smelter, which is now back in operation.
The company plans to invest $2.1bn this year, including research into new metal applications, according to Reuters.
