Recently, Potanin announced that the production facilities of the «Norilsk Nickel» plant will be moved to China. As a result, copper goods will be sold as Chinese products not affected by sanctions. The billionaire considers this way of circumventing restrictions acceptable. The plant construction will be completed by 2027. As Potanin himself stated, such a decision has been launched for development. The project will make it possible to eliminate financial losses associated with difficulties in settlements, cancelled supplies, and lower metal prices. Any financier would agree that this is the right decision.
A plant representative stated that it refers to the melting capacities of copper production. When asked for clarification by a Forbes correspondent, the billionaire specified that the plant itself would remain and continue operating even after completion of construction in China, excluding the smelting shop. However, there are no considerations about other enterprises. Conducted calculations indicated that the company can receive 80% of the profit that was before the introduction of sanctions. At the same time, transaction prices, commissions and intermediary fees account for 7% of the goods price.
More details about restrictions.
Before investing in a business, an investor conducts an assessment of the potential profit, so separate attention is paid to sanctions. America and Britain introduced a ban on imports of nickel, aluminum and copper obtained in Russia. The restrictions concerned sales on exchanges. For example, well-known exchanges like CME and LME cannot accept deliveries of sanctioned products. After the ban entered into force, the platforms stopped deliveries of metals produced after the specified date.
Potanin reported that such pressure forced thinking about how product delivery to sales markets can be organized. One of the unconventional options became moving part of production capacity to consumer markets. The scheme for moving the plant to China will be developed together with a foreign company that wished to remain anonymous.
As a result, copper goods will be sold as Chinese products not subject to sanctions. Environmental problems will also be moved to the country’s territory. That is, harmful emissions generated during operation will not negatively impact the environment. Construction completion is scheduled for 2027. A Norilsk Nickel spokesman said approximately 2 million tons of copper concentrate will be shipped to China annually by sea routes.
The political side of the issue.
Any business requires government assistance, and the presented project was no exception. According to the businessman, this proposal received political support and was included in the agenda for meetings between representatives of the two countries. Essentially, over the course of four years, it will be possible to achieve indicators that will be several times higher than current ones. They will increase by 20% compared to previous years. The plant owner assured that the majority of profits will be directed to Russia, where it will be used for financing.
In addition to copper, deals can be concluded with other manufacturers from China that work with nickel products or other metals. The company’s shares on the stock exchange are rising, with one share reaching a price of 159.74 rubles. It is unknown how much higher they will rise going forward, as this depends on development.