Russia's OAO Norilsk Nickel to sell most of overseas assets

Russia's OAO Norilsk Nickel, the world's largest nickel and palladium producer, is selling most of its overseas assets in order to focus on its Tier 1 assets in Russia.

The sell-off includes assets in Botswana, South Africa, Australia and Finland.

The Moscow-based company has hired British bank Barclays to sell a majority of its international assets, including Norilsk's 50 per cent stake in the Nkomati joint venture in South Africa, its 85 per cent stake in Botswana's Tati Nickel, and its Harjavalta nickel refinery in Finland, The Wall Street Journal today reported, citing  people familiar with the matter.

Last month, it had hired Citigroup to handle the sale of its Lake Johnston, Black Swan, Cawse, Waterloo, Avalon and Honeymoon Well nickel assets in Australia, most of which came into its portfolio through the 2007 acquisition of LionOre Mining.

Three of its four mines in Australia have suspended production for an indefinite period due to the deteriorated economic environment and drastic fall of nickel prices.

On 4 October, Norilsk Nickel unveiled a  new corporate strategy in London of focusing on its Tier 1 metals and mining assets in Russia, while disinvesting its international assets between 2014-2016.

Norilsk Nickel classifies projects as Tier 1 if they are large scale, deliver greater than $1 billion in revenue, have an EBITDA margin greater than 40 per cent and have a reserve life of greater than 20 years.

The company, where Russian tycoons Roman Abramovich and Oleg Deripaska hold stakes, will invest $6 billion capex over the next three years and two thirds of this is intended for brownfield projects with a high level of profitability and low risk.