How can OAO Norilsk Nickel protect the living standards of thousands of workers cut off inside the inhospitable Arctic while also satisfying its shareholders?
Shanghai Metal Market reports that the slump in the ruble and a resulting rise in inflation could have an outsize effect in the town of Norilsk 300 kilometers inside the Arctic Circle where more than a quarter of the 220,000 population work for the company, and it’s hard to shop around.
Winter temperatures in Norilsk plunge to levels that visitors can find distinctly uncomfortable, but for the isolated workers who live there any hint of a rise in the cost of living is equally unwelcome.
With the ruble down 50% against the dollar since early last year and Russian food inflation above 15% , it falls partly to the company to bear the cost of holding down prices in the grimy industrial city where it is based.
Norilsk Nickel, the world’s largest producer of nickel and palladium, owns a loss-making chain of seven shops called “Sunflower” which sell staples such as milk and bread more cheaply than other stores in the city since 2011.
The company also helps other retailers in town bring food supplies to the city and subsidizes their transport costs. It increased its workers’ salaries on Jan. 1 and plans another review on April 1, said Vladimir Potanin, chief executive and co-owner.
“We are doing our best to compensate for increases (in food prices),” said Potanin, Russia’s 8th richest man.
Rising 1.7% to close at $14,925 per metric ton, the nickel spot price experienced the biggest change on the LME for Thursday, January 29. On the LME, the 3-month price of nickel increased 1.6% to $14,960 per metric ton. At INR 922.00 ($15.04), the Indian nickel cash price finished the market day up 0.7% per kilogram.
Chinese stainless steel closed mixed on Thursday. The price of Chinese ferro-chrome remained essentially flat at CNY 10,950 ($1,753) per metric ton. For the fifth day in a row, the price of Chinese ferro-moly remained essentially flat at CNY 87,000 ($13,931) per metric ton.
The price of Chinese primary nickel rose 1.3% to CNY 108,800 ($17,422) per metric ton. The Allegheny Ludlum 316 stainless surcharge showed little movement on Thursday, hovering around $0.94 per pound. The price of Chinese 316 stainless coil saw little movement at CNY 23,700 ($3,795) per metric ton. The price of Chinese 304 stainless coil was unchanged at CNY 16,700 ($2,674) per metric ton. For the fifth consecutive day, the price of Chinese 316 stainless steel scrap held flat at CNY 12,950 ($2,074) per metric ton.