* Eramet says Norilsk would sell to Asia if targeted by West
* Europe would be hurt by higher nickel premiums
* French miner concerned about Ukrainian manganese alloy
PARIS, July 30 An embargo against Norilsk Nickel
as part of Western sanctions against Russia would hurt
nickel users in Europe and the United States rather than Norilsk
itself, the head of French mining group Eramet said.
Norilsk, the world's largest producer of the stainless steel
ingredient, has not been targeted so far by western measures
aimed at punishing Russia for its support of pro-Moscow rebels
in neighbouring Ukraine.
"Nobody expects sanctions against Russia and Norilsk would
affect Norilsk's production since it would sell to China if it
couldn't sell elsewhere," Eramet Chief Executive Patrick Buffet
said during a presentation of Eramet's first-half results on
"It's unlikely an embargo by Europe would materialise,
because it would be shooting itself in the foot, since Norilsk
could ship its production to Asia, creating a shortage in Europe
and oversupply in Asia. The consequence would be a jump in
physical premiums in Europe and a discount in Asia," he added.
The most likely scenario for western restrictions against
Norilsk would be a U.S.-only embargo, which would push up nickel
premiums there but not hit the world market, Buffet added.
Nickel prices have already rallied this year after a
ban by Indonesia on nickel ore exports curbed supply to China.
A joint embargo by the United States and Europe against
Norilsk would contribute to that rally, but the biggest impact
on world prices is likely to come from an expected upturn in
Chinese demand, Buffet said.
Chinese stocks of Indonesian nickel ore are estimated to
have fallen by half in the past five months, suggesting they
could run dry within the next few months and prompt a jump in
Chinese import demand, Eramet executives said.
Eramet reported earlier on Wednesday that it had swung back
to an operating profit in its first half as higher prices helped
curb losses at its nickel division.
In manganese, the carbon steel ingredient which Eramet also
mines and processes, there was uncertainty surrounding Nikopol,
a major manganese alloy producer in Ukraine that has been caught
up in the crisis there, Buffet said.
After Nikopol's owner, the Privat Group, publicly backed the
Ukrainian government against Moscow, Russian steel makers have
been looking for alternative suppliers, which could lead
Nikopol to offload some supply in Europe, he said.
"This is obviously a concern, and it reinforces our policy
of expanding in refined alloys," he said.
A lack of investment in Nikopol's plant in the
Dnipropetrovsk province means, however, it no longer has a big
competitive advantage over European producers as it did in the
past, Buffet added.
(Reporting by Gus Trompiz; editing by Michel Rose)