Moscow doubles nickel tax, how will NILSY, world's largest nickel producer react?


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Starting in a month, nickel from Russia will be 5% more expensive thanks to a new executive order . This indicates just how robust demand for metals is getting around the world.

Customers of Norilsk (NILSY ), the world's biggest nickel producer, and other Russian miners currently pay a tariff of 5% on all shipments of Russian nickel they receive.

As of December 19, that surcharge will double.

This is a great sign of just how strong NILSY in particular is in the current competitive environment. The stock has done extremely well in the current commodity boom as nickel prices recover from the summer slump.

Moscow suspended its nickel and copper export duties during the financial crisis to help local miners. But in August, Vladimir Putin gave NILSY management what amounts to an ultimatum: come up with a better system to pass royalties back to the government or the government would come up with a plan "which shareholders might not like."

The new system appears to have been the creation of NILSY management, according to announcements the company made back in September. While it remains to be seen how shareholders will react, it definitely means higher costs for customers who need to work with the company -- or else develop their own nickel assets.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Commodities , Investing Ideas


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