MOSCOW: Nornickel expects its 2021 nickel, copper, platinum and palladium output to fall 15-20% short of original guidance due to waterlogging at two Siberian mines, the Russian company said on Tuesday.
The mines are unlikely to restart fully for another 3-4 months, the company said.
The announcement pushed nickel, platinum and palladium prices higher. Nickel quickly gave back some of its gains, but platinum was up around 1% and palladium shot up 5% to its highest in more than a year. Nornickel shares were down 5.5% in Moscow.
Nornickel, the world’s largest palladium producer and a leading nickel producer, partly suspended operations at the Oktyabrsky and Taimyrsky mines on Feb. 24 after detecting subterranean water flowing into one of them.
The company said that nickel production is expected to miss its 2021 output guidance by 35,000 tonnes, copper by 65,000 tonnes and platinum groups metals by 710,000 troy ounces.
Nornickel is installing barriers and pouring 30,000 tonnes of concrete into the Oktyabrsky and Taimyrsky underground mines to stop the inflow of water, it said in a statement. The mines account for 36% of ore mined by Nornickel in Russia.
Lower output will translate in a $1 billion-$1.5-billion loss in the company’s 2021 core earnings, known as EBITDA, analysts at BCS said in a note.
The company has faced environmental and production safety issues after a major fuel leak at its power plant near the Arctic city of Norilsk and a series of smaller incidents over the past year. It paid $2 billion in environmental damages after the spill.
The Oktyabrsky and Taimyrsky mines are the largest mines in the Norilsk industrial area and are connected to each other.
The water inflow was detected at a depth of 350 metres in the Oktyabrsky mine on Feb. 12. Since the mine is 850 metres (2,790 ft) deep, Nornickel will be able to fix it and will ensure that the mine is not flooded, two industry experts told Reuters in March.