Arctic mining group PJSC Norilsk Nickel Co. signed an agreement with Russian Platinum LLC for an operational partnership to develop the Chernogorskoye deposit on Russia's Far Northern Taimyr peninsula.
The nickel and palladium producer will provide Russian Platinum with access to infrastructure and plans to sign a long-term off-take agreement for material produced from the site, according to a July 16 news release. Binding contracts should be concluded before the end of the first quarter of 2021.
The construction of a mining and processing complex at the Chernogorskoye deposit is the first stage of Russian Platinum's plans for a new large production complex in the Norilsk industrial area, CEO Evgeny Vorobeichik was quoted as saying.
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| The Chernogorskoye deposit, acquired by Russian Platinum in 2011, 15 kilometers southeast of the city of Norilsk. |
Initial plans for closer cooperation between the two companies fell apart in March after Norilsk's second-largest shareholder, United Co. Rusal PLC, vetoed a proposed joint venture known as the Arctic Palladium project.
The joint venture aimed to combine three licenses south of the city of Norilsk to create the world's largest greenfield platinum group metals cluster, targeting annual output of between 70 and 100 tonnes of the precious metals.
Rusal would have been prepared to support the Arctic Palladium joint venture had Norilsk's share of the arrangement been reflective of its actual contribution to the project, a spokesperson for the aluminum monopoly told S&P Global Market Intelligence in March.
The two companies have a long history of disagreement over Norilsk's strategy, particularly as it relates to the group's generous dividend policy, which Rusal relies on to service its debt.
Rusal recently joined a chorus of criticism that included Russian President Vladimir Putin over a series of ecological disasters and accidents that have also weighed on Norilsk's share price. Rusal went so far as to demand a change of management and relocation of the company's headquarters to Norilsk, deep within the Arctic Circle, as well as an overhaul of corporate policies towards environmental and safety issues.
Norilsk's board said in a statement that it had taken note of Rusal's proposals and would discuss them at a meeting at the end of July. Moscow brokerage BCS Global Markets said in a July 16 note that it does not expect any major changes to the company's management.
Norilsk blamed melting permafrost for the collapse of a soviet-era fuel tank that disgorged 21,163 tonnes of diesel into two rives at the end of May, turning them crimson, and faces a fine of around US$2.1 billion from Russia's environmental watchdog, Rosprirodnadzor. Minister of Natural Resources Dmitry Kobylkin said the scale of the damage caused to Arctic water resources by the accident was unprecedented, and compared the spill to the 1989 Exxon Valdez disaster, according to a July 6 report from Interfax.
BCS Global Markets expects the damages to be reduced eventually, according to a July 16 note. "However, even if Norilsk Nickel pays the whole amount it will be able to sustain it while offering [circa] 10% dividend yield," the firm said.
The spill highlights the need to review the suitability of legacy infrastructure and to design for climate change, David Pearce, SRK Consulting's managing director for Russia, told Market Intelligence in June.
In June, workers at Norilsk's Talnakh concentration facility were caught pumping wastewater from a tailings dam into the surrounding tundra. And on July 12, a subsidiary's pipeline leaked 44.5 tonnes of aviation fuel into a lake.
The impact of climate change on Russia's industrial infrastructure in the tundra is rising as the permafrost becomes increasingly subject to melting caused by higher temperatures, George Voloshin, the head of consultancy Aperio Intelligence's Paris branch, told Market Intelligence.
In June, an unprecedented heatwave in northern Russia produced the highest ever recorded temperature in the Arctic Circle as wildfires raged across Siberia.