* Norilsk sees ‘12 nickel output at least 295,000 tonnes
* Palladium output seen above 2.6 million ounces
* Analysts says no major growth catalysts in short term
* Shares off 1.7 pct in Moscow, underperforming MICEX (Adds analyst comments, share price)
By Alfred Kueppers
MOSCOW, Jan 30 (Reuters) - Russia’s Norilsk Nickel said on Monday its nickel output could recover slightly this year, although analysts said the world’s largest producer of nickel and palladium could delay ramp-ups of its international operations on cost concerns.
For 2012, Norilsk forecast nickel output at 235,000 to 240,000 tonnes at its Russian divisions and 60,000 to 65,000 at the international operations.
That adds up to as much or more than its total nickel output in 2011 at 295,000 tonnes, which was down 0.8 percent from the previous year, including contributions from operations in Australia, Finland, Botswana and South Africa.
The Russian metals giant, which takes its name from a mining town above the Arctic circle, is expected to keep Russian output high, given that its Kola and Polar units have a negative production cost thanks to their output of copper, platinum and palladium as by-products.
“I think you have to differentiate between the lowest-cost production they have in Russia and the international assets,” HSBC analyst Vladimir Zhukov said.
He added that although Norilsk Nickel does not publish its production costs, its Australian assets are considered to be its highest-cost mines.
Australian output was 1,748 tonnes of nickel in concentrate last year, up from zero in 2010 as it restarted operations.
Its Russian divisions produced 237,227 tonnes in 2011, up from 235,518 tonnes the previous year.
Production fell at its Finnish assets to 48,524 tonnes of nickel from 49,159 tonnes in 2010 and at its African mines to 15,161 tonnes of nickel in concentrate from 19,702 tonnes in 2010.
Zhukov added that Norilsk Nickel will not be able to increase domestic production significantly until it brings a new mine online in the next decade as the quality of its older mines continues to decline.
He said nickel output at its Russian operations is scheduled to grow to 280,000 tonnes by 2023-2024.
The nickel market is expected to be oversupplied this year, with HSBC analysts recently raising their forecast for a surplus to 62,000 tonnes from an earlier 31,000 tonnes.
Nickel prices could come under pressure if Chinese steel demand weakens and Europe’s economy remains fragile.
“Almost 70 percent of all nickel is used for stainless steel, which is used in the construction sector and very dependent on Chinese demand,” Uralsib analyst Valentina Bogomolova said.
Norilsk CEO Vladimir Strzalkovsky hinted in a recent TV interview that the company could make slight production cuts this year, but analysts say higher-cost Chinese nickel pig iron smelters are likely to bear the brunt of any cuts.
Nickel pig iron producers will come under pressure if prices fall to around $17,000 a tonne.
Benchmark three-month nickel traded at $21,374 on the London Metal Exchange at 1630 GMT.
Norilsk did not provide any price guidance for its portfolio of metals, but Bogomolova said she saw nickel at $21,700 per tonne, down about 5 percent from 2011. A Reuters base metals poll released last week put the average 2012 price at $21,670 per tonne.
Norilsk Nickel shares were off 1.7 percent in Moscow, underperforming the MICEX, which was up 0.2 percent.
In addition to its leading position in palladium production, Norilsk also mines significant quantities of copper and platinum.
Since all three are by-products of the nickel mining operations, Norilsk has a significant cost advantage over rivals that mine those metals separately.
“They are still going to be better off than global peers. They have copper as well as platinum and palladium in the product mix,” Morgan Stanley analyst Dmitriy Kolomytsyn said.
Palladium output is expected to be 2.6-2.65 million ounces at the Russian divisions and 95,000-100,000 ounces at the international operations in 2012. Last year’s total output was 2.81 milion ounces, off 2 percent from 2010.
Platinum output is seen at 650,000 to 660,000 ounces at the Russian division this year, while the international operations are expected to mine 20,000 to 25,000 ounces. Last year’s output was 695,000 ounces, matching the 2010 result.
This year’s copper output is seen at 355,000-360,000 tonnes at the Russian division, while the international operations are expected to mine 9,000-10,000 tonnes. Last year’s output was 378,000 ounces, off 3 percent from 2010.
“There is no major growth coming from Russia. I don’t expect any major growth in the next several years,” ING analyst Maxim Matveyev said, adding the company’s financials would be increasingly dependent on metals prices as output declined. (Editing by Douglas Busvine and Jane Baird)