The company signed a deal with BASF SE this year to experiment with boosting its sales of metals to battery producers.
“This will be a test project and, if successful, we may start production of industrially important amounts by 2020,” Potanin said. “We want to see how the situation will develop.”
In Flux
Yet, Nornickel will hold off making investments in large-scale output for electric cars while the technology is still in flux, and the company is ready to reconsider its vision as trends change, according to the CEO. “We’re not a venture-capital company,” he said. “We’re an industrial company and we need to invest in winning technologies.”
While the expansion of electric vehicles is poised to impact the nickel market, estimates of demand are uncertain at such an early stage, according to Sergey Donskoy, an analyst at Societe Generale SA in London.
“The technology is still developing,” Donskoy said. “Assessments of the future EV market and metals consumption are based on technology that’s available now, and speculation on what the consumer will buy.”
In addition, Nornickel will need to make significant investments to meet any spurt in demand, particularly as the grade of its ore gradually declines and EV manufacturers will have specific needs, he said.
Philosophical Decision
That raises the stakes for management, which needs to decide whether the company sticks to the mining business that it knows best or takes advantage of new opportunities that arise from electric vehicles or other developments in information technology.
“It’s not only a technical decision,” said Potanin. “It’s a decision about the philosophy of our company.”