Mining companies in Russia reduce investments and postpone asset purchases

Russia, a major producer of dozens of metals for the global market, has so far managed to keep production largely unaffected at its main smelting and mining regions from the pandemic but cannot secure them from reduced global demand and uncertainty. As the new coronavirus outbreak is adding to risks, three of Russian metals and mining companies said they were tightening belts with tools varying from reduced investment to delayed dividends or postponed asset purchases.

With the global diamond market severely hit, state-controlled Russian diamond producer Alrosa may review its 2020 production plan from the current 34.2 million carats as the pandemic hits its sales, Chief Executive Sergei Ivanov told RBC TV on Wednesday.

Alrosa, the world’s largest diamond producer, does not need state financial support as yet, but the situation could change if sales remain very low for three to four months, Ivanov said, adding that the company delayed some diamond exploration projects.

The nationwide novel coronavirus case tally now stands at 99,399.

One of Russia’s gold producers, Petropavlovsk, said on Wednesday it decided to postpone taking a decision on the purchase of one quarter of the TEMI, which it described less than a month ago as the project with great potential for exploration at the deposits in Russia’s Far East.

“In the current volatile environment, the company is focusing on ensuring a continuing satisfactory liquidity position,” Petropavlovsk said in a statement.

MMK, Russia’s third largest steel producer, said it decided to reduce its capital expenditures by 20% in 2020 and defer approval of an interim dividend payment until autumn to boost liquidity.

“We have seen weakening demand in key industries consuming steel, including MMK’s products, such as the construction, automotive and pipe-making industries,” Viktor Rashnikov, MMK’s controlling shareholder, said in a statement.

Its peer steelmakers in Russia took similar moves last week: Severstal reduced its 2020 capital expenditures by 15%, while NLMK proposed to halve a previously planned dividend and change its 2020 investment plan.

Source: reuters.com