UPDATE 1-Russia Norilsk to cut nickel, palladium output
(Adds details, background)
MOSCOW, Dec 1 (Reuters) - The world's top producer of nickel and platinum group metal palladium, Norilsk Nickel (GMKN.MM), will cut output of the metals this and next year, Norilsk said on Monday, as demand falls amid the global financial crisis.
Nickel output is expected to fall to 298,000 tonnes this year from previously planned 300,000-305,000 tonnes, and palladium output to 2.764 million ounces from the earlier forecast 3.00-3.05 million ounces.
In 2009, Norilsk expects to produce 290,000-305,000 tonnes of nickel and 2.610-2.625 million ounces of palladium, it said in a presentation on its web site www.nornik.ru.
Norilsk intends to keep copper output at the planned level of 420,000 tonnes this year, but plans to cut output to 385,000-400,000 tonnes in 2009 due to completion of mining rich cuprous ores.
It sees platinum output falling to 625,000 ounces this year from the previously planned 710,000-720,000 ounces and to 600,000-620,000 ounces in 2009.
CUTTING CAPEX
Norilsk intends to keep steady levels of nickel production at the Polar and Kola divisions.
In 2009, 16,000 nickel production capacity will be put on care and maintenance. It will be offset by increased production from purchased intermediates, Norilsk said.
Further reduction of platinum group metals production in 2009 will result from falling PGM content in ore, it said.
Norilsk said its main objective in 2009 will be cash conservation without compromising future growth.
It estimates cutting costs in Russia by more than $800 million in 2009. It aims to reduce headquarters staff by 16 percent or 220 people and to keep all production staff.
Norilsk plans to cut foreign capital expenditures by 34 percent to $460 million in 2008 from the previously planned $696 million and by a further 48 percent to $240 million in 2009.
Norilsk said it targets more than a 15 percent decrease in direct foreign units operation costs and reducing approximately 1,150 staff.
It will focus on cash-generating assets while suspending production at other operations and reducing capital expenditures to critical committed amounts with an option for fast future recovery, as well as postponing exploration and early stage projects. Continued...
