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Nickel crisis in Murmansk

Nickel mining

The drop in nickel prices from more than 50,000 USD per ton to less than 10,000 USD has resulted in drastic revenue cuts for nickel producer Norilsk Nickel. The consequences might be serious for the company’s mining towns in the Kola Peninsula.

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In an interview with newspaper “Pechenga”, deputy company manager in Norilsk Nickel subsidiary Kolskaya GMK Vladimir Peretolchin confirms that his company will not support the mining and metallurgy towns with addition transfers following the drop in nickel prices and subsequent reduction in revenues.

Vladimir Peretolchin (pechenga-gazeta.ru)The last years, the company has signed agreements with the Murmansk regional administration on the additional support to the mining towns. The transfers have been paid in addition to regular tax money.

Mr. Peretolchin, who is also member of the Murmansk regional parliament, says the addition funding has been divided on a 50-50 deal to the company’s two industrial centres in the Kola Peninsula, Monchegorsk and Pechenga rayon.

The funding has been a major and important budget bonus for the two mining towns as Norilsk Nickel has had record-high revenues. In 2007, the company had a net profit of 4.8 billion EUR. Now, however, the situation is bound to turn towards the worse.

In the interview with “Pechenga”, the Norilsk Nickel representative also admits that the drop in metal prices complicates stable production in the Kola Peninsula. He still maintains that the company will continue its two major investment projects in the area — the further development of the “Severny Glubokii” underground mine and the construction of a new briquette plant in Zapolyarny.

He also does not exclude that “unpopular” decisions will be made regarding the nickel smelter in the area.

-There will possibly be taken unpopular measures on the smelting plant, however this issue remains to be solved, he says, adding that the reconstruction of the smelter currently is in the final planning phase.

Vladimir Peretolchin is deputy manager of Kolskaya GMK, Norilsk Nickel’s subsidiary in the Kola Peninsula. In addition, he is member of the Murmansk regional Duma and chairman of the United Russia party branch in Pechenga Rayon.