Norilsk Nickel is in advanced talks with Chinese companies in the hope of securing financing for a large new copper mine, in a demonstration of how Russian groups are increasingly looking east for funds.
Western sanctions imposed on Russia last year because of the crisis in Ukraine had “accelerated the process” of moving closer to China, said Vladimir Potanin, the chief executive and largest shareholder of Norilsk.
“I think it was already in the minds of our leaders and our government but sanctions accelerated this process,” he said in an interview with the Financial Times.
Norilsk is the world’s largest nickel producer with a market value of more than $30bn, and it is hoping Russia’s Chita region — the home of its new Bystrinsky copper mine — can become a hub to service the Asian market.
The company has not been directly affected by the western sanctions imposed after Russia’s intervention in Ukraine. However, Andrei Klishas, former president of Norilsk Nickel, was included on a list of Russian individuals targeted by the US and European sanctions.
Norilsk is currently in discussions with Chinese companies that would buy copper from the Bystrinsky mine, which is located about 100 kilometres from the Chinese border.
Norilsk hopes such purchase agreements will help draw in long-term cheap lending from China’s banks for the mine.
To lower the potential risks for any Chinese financial institution, the company is also talking with Russian state-owned banks including Vnesheconombank. Lender VTB has already agreed to provide $1bn for the Bystrinsky mine.
“With the Chinese partner and the access to Chinese finance we could explore more around the [Bystrinsky mine],” said Mr Potanin. “It’s a matter of longer-term and cheaper money . . . they have deep pockets.”