Rusal jumps 11pc on hopes of nickel merger

Shares of Rusal (0486) jumped 11.35 percent yesterday on news that it would be merged with Russia's major nickel maker.

Billionaire Vladimir Potanin, the biggest investor in Norilsk Nickel, said he's ready to discuss merging the mining giant with Rusal as sanctions against Russia weigh on both companies.

Potanin told RBC TV he had sent a letter on Monday confirming his agreement to start merger discussions "because this allows the creation of a national champion. This allows us to even further diversify the shareholder base."

He said the need to "acquire extra stability against sanctions" and the potential requirement for state support for projects in Russia were among the reasons to discuss the deal.

He added that the proposal came from the management of Rusal. Potanin acknowledged a lack of production synergies but said the deal was justified by other arguments including both companies' shift towards a "green economy".

Potanin, Russia's richest man, controls about 35 percent of Nornickel, a key producer of nickel and copper and the world's biggest miner of palladium.

He said that Nornickel is not under sanctions, despite the penalties imposed against him by the UK.

About 20 percent of the world's nickel comes from Russia, with nearly all of that from Potanin's Nornickel. The company also produces about 40 percent of the world's palladium, used in anti-pollution devices in gasoline cars.

Nickel price jumped significantly in March when the Russia-Ukraine war started, worrying that the supply of the material will be affected. London Metal Exchange suspended nickel trading back then and is now facing compensation lawsuits.

Meanwhile, Russian state-controlled media outlet Sputnik said Turkey has discovered a massive reserve of rare earth elements, enough to cover the global demand for over 1,000 years.

The reserve is in the northwestern province of Eskisehir, Sputnik quoted a Turkish media report which cited the Istanbul Mineral and Metal Exporters Association as saying.

Metin Cekic, a member of IMMIB told the Turkiye newspaper that the discovered supply contain 694 million tonnes of the rare earth element, worth billions of dollars, the Russian outlet said.

Sputnik and its state-owned peer RT have been banned in the European Union over what it called their "systematic information manipulation and disinformation" over Russia's invasion of Ukraine.