Russian metals giant turns to China for copper processing

Russian mining and metals conglomerate Nornickel is in talks with China's North Copper Co. about processing its copper concentrate in Houma, Shanxi province, according to a report by Bloomberg on September 15. The agreement could potentially lead to the shutdown of Nornickel's highly polluting smelter in Norilsk, an Arctic city in Russia.

North Copper would need to refurbish some of its facilities, a process that may take up to two years. Originally, Nornickel intended to construct a new copper smelter in the Chinese port city of Fangchenggang when it announced its plan to move final-stage copper processing to China in early 2024. However, the project was halted after North Copper withdrew its support following management changes.

Moving the final stage of copper processing to China, where many of Nornickel's major customers are based, would allow the Russian company to reduce costs. Western technology sanctions imposed due to Russia's invasion of Ukraine have limited Nornickel's access to European, American, and Japanese equipment, making major industrial projects within Russia significantly more expensive.

The negotiations with North Copper primarily revolve around adapting their facilities to handle Nornickel's concentrates, which have a higher nickel content than the material typically processed by Chinese smelters. The recovered nickel would then be shipped back to Russia. Nornickel announced in April 2024 its plan to close the copper smelter in the Arctic region of Russia and establish copper production capacity in China by mid-2027.

At the time, CEO Vladimir Potanin cited Western sanctions as making it increasingly difficult to obtain necessary equipment and spare parts to modernize Russian production facilities.