Russia Said to Stall Palladium Sale to Norilsk-Led Group on Rout

  • Bank of Russia sees price as too low to sell for now
  • Norilsk leads investor group wanting to buy stockpiled metal

Russia’s central bank sees palladium prices as too low to sell stockpiled metal to a group of investors led by GMK Norilsk Nickel PJSC, according to four people with knowledge of the talks.

Negotiations on sales have stalled with prices near a five-year low, said the people, who asked not to be identified because the matter is private. Vladimir Potanin, the billionaire chief executive officer of Norilsk, said last year that the group would invest as much as $200 million buying the metal and that the Bank of Russia agreed in principle to sell.

Norilsk is the world’s largest miner of palladium, which is mostly used in devices that restrict harmful emissions from vehicles. It slid 36 percent in the past year and this month reached the lowest since 2010 after South African production rebounded and China’s slowing economy curbed demand. It’s this month’s worst-performing metal.

The press services of Moscow-based Norilsk and the central bank declined to comment.

Potanin said in 2014, when prices were more than 50 percent higher than now, that he planned to gather investors to bring the total proposed purchases of palladium from financial institutions, including the central bank, to as much as $2 billion. He said at the time the proposal was based on ensuring availability for industrial customers concerned about volatile supplies. Norilsk controls about 40 percent of the global palladium market.

Palladium’s Slump

Palladium has dropped 12 percent this month to $494.50 an ounce. Prices may recover to more than $600 by year-end amid an annual deficit, Macquarie Group Ltd. said this week.

The size of the central bank’s stockpile is a state secret. While it considers what to do with its hoard, the country’s minerals depository, known as Gokhran, is buying the metal. It purchased a combined 2 metric tons of platinum and palladium last year and may buy more in 2016, Oleg Natarov, head of the budgeting department, said in November.

Before it's here, it's on the Bloomberg Terminal.