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BASF to prepay $400 mln to Norilsk Nickel for platinoid supplies

January 27, 2014, 19:15 UTC+3 MOSCOW

Platinoids - platinum and palladium - provide the basis for the production of automotive catalysts

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MOSCOW, January 27. /ITAR-TASS/. The chemical company BASF will make a 400 million U.S. dollar prepayment to Russia’s Norilsk Nickel, a nickel and palladium mining and smelting company, for the supply of platinoids under a long-term contract, a source close to the transaction told ITAR-TASS on Monday, January 27, but declined to specify volumes.

“These are considerable volumes,” he said.

Platinoids - platinum and palladium - provide the basis for the production of automotive catalysts, demand for which has been rising rapidly lately, driven by the growing number of automobiles in the world, primarily in China.

Under the contract, BASF will make a prepayment of 400 million U.S. dollars to Norilsk Nickel, but the mutual obligations and the supply timeline are structured in such a way that the prepayment will not be included in the Russian company’s net debt and will reduce its circulating assets by the same amount.

Earlier, Norilsk Nickel and BASF signed a long-term contract for the supply of platinum group metals (PGMs). The contract was signed in BASF headquarters in Ludwigshafen, Germany.

Norilsk Nickel will deliver PGM chemicals to BASF production site in Europe. BASF will use them for production of auto catalysts, which lower pollutant emissions, as well as in chemical and pharmaceutical products.

The contract has resulted from a longstanding fruitful relationship the two companies share.

Norilsk Nickel is the largest palladium and nickel producer, leading supplier of platinum, cobalt, copper and rhodium with a wholly owned distribution network.

BASF is one of the largest chemicals companies and a market leader in scientific and application development of industrial usage for PGMs.

The Russian company has repeatedly said that it sells most of its palladium under long-term contracts. It plans to increase palladium production from 2.576 million ounces (80 tons) in 2013 to 2.53-2.63 million ounces (79-82 tons) in 2016 and to 2.73-2.84 million ounces (85-88 tons) in 2018.

Platium production will increase from 626,000 ounces (19.5 tons) in 2013 to 615,000-640,000 ounces (19-20 tons) in 2016 and to 665,000-690,000 ounces (20.7-21.5 tons) in 2018.

In 2012, Norilsk Nickel made 300,034 tons of nickel, 84.9 tons of palladium, 363,800 tons of copper, and 21,200 tons of platinum.

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