There are two major reasons mining billionaire Vladimir Potanin is within a hair’s breadth of regaining his ranking as Russia’s richest tycoon this year.
One is higher prices for nickel used in batteries as metals traders bet electric vehicles are the future of transportation. The other is a jump in palladium on wagers that gasoline cars will be here for a long time yet.
They’ve boosted the value of Potanin’s 30 percent in MMC Norilsk Nickel PJSC, the top miner of both metals, lifting his net worth 12 percent this year to $19 billion. They also show how Nornickel, as it’s known, will gain from auto-industry changes even if optimism on electric cars is overdone.
Palladium, used to cut pollution in gasoline and hybrid-electric vehicles, is up 47 percent this year in the best performance of any major metal as buyers turn away from dirtier diesel-powered cars after an industry scandal on emissions testing. Nickel climbed 16 percent in the period.
“Development of the electric-vehicle industry will lead to increasing demand for nickel and cobalt, but it won’t happen that fast,” Potanin said in an interview Monday. “Demand for palladium won’t fall as there will still be a lot of gasoline powered cars. And regulations are getting stricter.”
Potanin said that he would prefer to have palladium prices at parity with platinum and that Nornickel will make sure that supply remains stable despite high demand. To that end, the company “decided against starting a marketing program for palladium for jewelry because we want to send a clear signal to the market that the palladium we produce is for the car industry," he said.
The company controls 40 percent of the world market for palladium, mostly used in auto-catalysts to cut pollution from gasoline cars. Nornickel shares have risen 27 percent in the past six months, increasing Potanin’s wealth to just $100 million less than steel tycoon Alexey Mordashov, Russia’s richest man, according to estimates by the Bloomberg Billionaires Index.
BASF Deal
It also dominates nickel output and is Russia’s biggest producer of copper, both needed for batteries used in the growing numbers of electric vehicles hitting the street.
Demand for nickel from the electric-car market may grow to as much as 400,000 metric tons in 2025 from just 20,000 tons, Nornickel says. That adds to existing demand for nickel from stainless-steel makers, the biggest users of the metal.