Russian nickel producer expects further drop in output
Russian nickel producer expects further drop in output

25 January 2023 – Major Russian nickel miner Nornickel, which mines platinum, palladium and copper as well as nickel, expects production to drop further in 2023. Copper prices at highest level in seven months. Will the UK now get its own carbon border tax to pay own steel companies to go green?

Nornickel expects further production decline in 2023

Nornickel continues to fall well short of its record 2020 nickel results in 2022, only just making it above its 2018 results, and expects another drop in production in 2023 due to maintenance.

Only maintenance and preservation in 2023?

The press reports also indicate that Nornickel will focus more on maintenance and consolidation of existing production capacities and that an increase in production is not to be expected.

Nickel group sees further risks

The group also anticipates potential risks due to the geopolitical situation that could impact the group’s operations.

Will Russian nickel production fall to latest low?

The Nornickel Group’s currently published data indicates that the company expects production to fall even below 2017 levels. Currently, the group is forecasting a possible further production decline of up to 8% in 2023.

Base metals: Copper price on the upswing

Copper prices are quoted at around 9,350 US dollars per tonne on the London Metal Exchange – around twelve percent higher than at the beginning of the year and the highest in seven months. Most recently, the price rose for five weeks in a row, which had last been the case more than 19 months ago. The main driver of this price rally is the economic optimism triggered by the Chinese reopening.

Second largest copper producer blocked

The civil unrest in Peru – the second largest copper producer – has also heightened concerns of a supply deficit. This is because the current roadblocks are hindering the transport of the mined copper concentrate to the shipping ports. Peru’s third-largest mine, Las Bambas, has been unable to transport copper from the mine since the beginning of January – about two per cent of the world’s supply is therefore currently missing. However, a prolonged supply shortfall from Peru could support prices and bring further upside potential.

Carbon Border Tax now also in the UK?

For some time now, there have been repeated announcements that the United Kingdom is planning to introduce its own carbon border tax on steel products, among others. Similar to the European Carbon Border Adjustment Mechanism (CBAM), CO2 taxes are to be levied at the border on products imported into the UK that have not been produced in accordance with British environmental standards.

Now, according to media reports, there seems to be further movement on this. Together with an aid package for British steel producers, a concrete proposal for a carbon border tax in the UK could soon be made.

However, a delicate detail could be that the proceeds from the carbon border tax are apparently to go to the two largest British steel producers, among others. This would enable them to invest in green technologies.

This raises the legitimate question of whether the British manufacturers themselves are currently in a position to fully comply with domestic environmental standards and whether the countries concerned will not immediately file a complaint with the World Trade Organisation (WTO).

Economic optimism also in the Eurozone

Economic optimism is currently also reflected in the fact that the available data show that the Eurozone is back in the growth zone and that the “much-heralded” recession has simply been cancelled.

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