MOSCOW, Sept 12 (Reuters) – Russia’s Norilsk Nickel , the world’s biggest nickel producer, said it plans to slim down and focus on its top assets, joining other big mining companies in shedding businesses in the face of weak metals prices.
The company, partially owned by Russian tycoon Vladimir Potanin and aluminium giant Rusal, is having to cope with a more than 20 percent plunge in nickel prices this year, although it has remained profitable. Weak metals demand however is making it difficult to sell businesses.
Under its new strategy announced on Thursday Norilsk stuck to its plan to sell off assets in Africa and Australia, despite the failure to close any deals in recent months.
Deputy chief executive Pavel Fedorov said the company would focus on so-called “Tier 1” assets – high quality projects with large scale – with current or potential annual revenue of more than $1 billion, EBITDA margins of more than 40 percent and 20 years of viable reserves.
“We need to get rid of assets that do not meet our “Tier 1″ objectives,” Fedorov told reporters.
The company plans to concentrate on its low-cost Polar operations located on Russia’s Taimyr Peninsula, which already accounts for the bulk of its production.
It said it would double its exploration budget for the Taimyr Peninsula, an unusual decision given the current market situation, when global miners are cutting exploration to reduce costs. Fedorov did not disclose the current or future budget size.
Potanin has run the company since late 2012 under a deal that ended a five-year row between the company’s shareholders over corporate governance. The board approved the revised strategy on Thursday.
Norilsk did not say if any changes had been made to its dividend policy and did not disclose planned production and capital expenditures, which are due to be announced in the fourth quarter.
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