Russian mining major MMC Norilsk Nickel (Norilsk) has revealed that it is to sell its Southern African and all its other international assets by the end of 2016.

This process, which will start next year, is part of the group’s new strategy, which will see it focus on ‘Tier 1’ assets. The new strategy will also see a clear focus on nickel and the associated copper and platinum-group metals (PGMs).

Currently, Norilsk Nickel Africa embraces two main operations – Tati Nickel, in Botswana, and Nkomati Nickel, in South Africa. Norilsk owns 85% of Tati (the other 15% is held by the Botswana government) and 50% of Nkomati, which is a joint venture with South African group African Rainbow Minerals, which has management control. Both Tati and Nkomati also produce copper, palladium and platinum as by-products. Further, Norilsk has a 6% shareholding in Botswana mining company BCL, the remaining 94% belonging to the Botswana government.

Norilsk’s other, smaller, international operations are in Australia; none are currently operational, although the company has been developing the Honeymoon Well project, which is expected to start production in 2017. The Harjavalta nickel refinery, in Finland, is categorised sepa- rately from the group’s other operations outside Russia and will remain part of Norilsk.

Norilsk defines a Tier 1 asset as being large in scale, producing revenues in excess of $1-billion, with high margins (40% earnings before interest, taxes, depreciation and amortisation) and a long life (more than 20 years). All the group’s current and likely future Tier 1 assets are in Russia. The reasons for focusing on these assets from now on is to allow a concentration of management attention and employee skills and talent to achieve economies of scale, to maintain good margins through the business cycle, to exploit the com- pany’s strong technical and geological capabilities and to make the best use of its existing infrastructure. The intent is to exploit the full potential of its Russian resources.

In addition, the strategy commits an average of $2-billion a year to capital expenditure from 2014 to 2018, will see exploration turned into an efficient business, seeks to cut operating costs and working capital, involves the disposal of noncore (as well as the international) assets, requires capital discipline and brings in return on investment as the key marker for the group. Further, Norilsk has approved its dividend targets and expects to pay dividends of at least $2-billion during 2013/14.

Of the group’s Russian operations, its Polar division already meets all the Tier 1 requirements. Under the new strategy, this division will be prioritised, with a doubling of its exploration budget, upgrading of the Talnakh concentrator to make it world class, the maximising of high-margin output using the current infrastructure and the development of the greenfield Skalisty project (which has a potential production rate of 2.4-million tons of ore a year).

The Kola division currently meets two Tier 1 criteria – being large scale and having a long life – but not the high margins criterion. So, the strategy seeks to turn the Kola division around and achieve sustainable profits by the end of 2014. The Bystrinsky project, in Russia’s Chita region, would have a long life, but it is still under evaluation. An audit of the project is under way and it remains subject to approval by the board.

Meanwhile, the group has announced that researchers in two of its subsidiaries have jointly developed a new technology to extract nickel from sulphide ores. The researchers are from the Department of Scientific and Technological Development and Environmental Safety of Kola MMC and from the Gipronickel Institute. The new technology has already been accepted by Russia’s Federal Intellectual Property Service.

The new technology uses a leaching process with the addition of oxygen and chlorine. Iron in the ore becomes a waste product and copper (constituted as a sulphide product) is separated from the leaching solution, which contains nickel and cobalt. Other impurities are then removed from the leaching solution and, in the electrolysis facility refined nickel and cobalt hydroxides are processed, resulting in commercial metals.

This new approach eliminates the need to pyrometallurgically process sulphide ore concentrates and so cuts both material and operational costs. Further, it increases the production of commercial products by up to 5%.