Nornickel Says Arctic Mine Flooding to Cause Palladium Shortage

(Bloomberg) -- MMC Norilsk Nickel PJSC, the world’s largest producer of palladium, expects a significant shortfall of the metal this year after flooding at its Arctic mines upended its December projection for an almost balanced market.

Rebounding demand combined with flooding at Nornickel’s Oktyabrsky and Taimyrsky mines, and incidents at the company’s concentrator, will produce a palladium deficit of 900,000 ounces, the Russian miner said on Thursday. While the mines are making a faster-than-expected recovery from the flooding, overall output will be curbed.

Palladium climbed to a record this month as it benefited from the outlook for low interest rates and quickening global growth. Demand from the auto sector -- the biggest consumer of the metal used in devices to curb pollution from gasoline cars -- is also rebounding in the wake of the pandemic.

“This year, we see an impressive recovery in automotive demand and other industrial applications almost to the pre-Covid levels, although partially subdued by the chip shortage,” Nornickel said in market update.

The palladium deficit will be partially eased by supply from stockpiles, including metal produced but not sold by Nornickel in 2020, the miner said. In 2020, the market shortfall was 300,000 ounces, it said.

Other Metals:

• Nornickel said the platinum surplus will be more than 1 million ounces this year
• The company expects the rhodium market to have 10,000-ounce deficit in 2021 compared with a 100,000-ounce shortage last year
• Nornickel revised down the 2020 nickel-market surplus to 76,000 tons, while projecting a surplus of 52,000 tons in 2021
  • In 2022 it expects the surplus to exceed 100,000 tons.

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