Nornickel moves closer to deal for new copper plant in China
MMC Norilsk Nickel PJSC, Russia’s biggest miner, is in advanced talks to build a large copper smelter on China’s south coast, according to people familiar with the situation.
The plant, to be located in the port city of Fangchenggang in Guangxi region, would produce 500,000 tons of refined copper a year using concentrate shipped from Russia, said the people, who asked not to be identified as the information is private. They described the move as an effort to move the final processing step closer to the world’s largest metal market.
Nornickel, as the company is known, has been exploring options for joint projects in China since at least earlier this year, motivated by deepening sanctions on Russian commodities, the firm’s president, Vladimir Potanin, said in April.
The people did not name the Chinese entity in talks with Norilsk.
Among other options, the Russian firm had previously held talks with at least two other Chinese companies about using their existing smelters to treat the Russian concentrate, the people said. That route is no longer under consideration and Nornickel is now focused on a greenfield plant, one of the people said. The plan is not yet finalized, however, and is still subject to change.
Nornickel’s press service declined to comment.
The Russian move comes as China grapples with a glut of existing refining capacity, however. Nornickel’s plan has sparked pushback from China’s own copper industry, said two of the people. Fangchenggang already has a 600,000-ton smelter run by China’s state-owned Jinchuan Group.
China’s share of global refined copper has been increasing after a frenzy of smelter construction in recent years. The capacity boom has put the industry in a predicament, as cutthroat competition for scarce raw materials crushes margins.
Nornickel is not sanctioned by the West, but the US and UK have placed restrictions on trading aluminum, copper and nickel produced in Russia, in a bid to curb President Vladimir Putin’s ability to fund his war on Ukraine.
China imported about 165,000 tons of Russian refined copper in the first nine months of the year, falling by more than one-third from the same period in 2023.