Russian company Nornickel is in discussions to establish a nickel production facility in China, targeting the growing battery sector, reported Reuters, citing three sources privy to the development.

The company is currently negotiating with several Chinese battery manufacturers to construct a nickel plant.

This proposed facility aims to process Russian nickel matte into nickel sulphate, a key component of electric vehicle batteries.

One of the sources said that Nornickel would supply 50,000 tonnes (t) of nickel annually to the proposed plant.

CNGR Advanced Material and Brunp Recycling, a subsidiary of CATL, are among the companies engaged in talks with Nornickel.

One potential location for the new plant is Hunan province, a hub for China's battery industry, although the decision has not been finalised.

The initiative represents Nornickel's effort to shift significant portions of its production to China as a strategic response to Western sanctions imposed on Russia following its invasion of Ukraine.

These sanctions have disrupted sales routes for Nornickel, which is now exploring ways to integrate its nickel into the global battery supply chain by relocating some of its production processes outside of Russia.

Earlier this year, the miner was in the news for planning to transfer its copper production to China.

Despite the potential benefits, sources indicate that Chinese companies are cautious due to the sanctions landscape and the risk of alienating Western buyers that may reject supplies with direct ties to Russia.

However, one source said that Nornickel's production will be a guaranteed long-term source for China-based companies that do not own nickel assets in Indonesia.

In 2023, Nornickel produced 209,000t of nickel, accounting for 6% of the global output.

Recently, Reuters also reported that Nornickel is looking to restart one of the two furnaces at its Nadezhda Smelter in early August 2024.