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Meeting with Musa Bazhayev

November 18, 2019, The Kremlin, Moscow

Vladimir Putin met with President of the Alliance Group and President of Russian Platinum Musa Bazhayev.

President of Russia Vladimir Putin: Mr Bazhayev, you had a good palladium project in the Arctic. Let us start with it. How is it going? Is there any progress?

President of the Alliance Group and President of Russian Platinum Musa Bazhayev: Mr President, thank you for your support. In this case, I will start with this project.

An agreement was signed with your participation between Russian Platinum and Norilsk Nickel on establishing a joint venture under the name of Arctic Palladium in the Norilsk industrial region. We are nearing the end of this process and I would like to report to you on the status of this project and its major socio-economic indicators.

The reserves of platinum-group metals will amount to 4,500 tonnes. The annual production capacity will be 120 tonnes. The project will create 5,860 jobs, it will produce 40 billion rubles in tax and it will promote socio-economic development of the Arctic. An increase in freight traffic along the Northern Sea Route and a substantial growth of Russia’s export potential are very important for Russia and this region as a whole. The creation of this joint venture will make Russia the world’s leader in the production of platinum-group metals.

In all, we have 770 million tonnes of ore. The work repayment period is 55 years. Production will be launched in 2024. The overall investment amounts to $15 billion. Annual revenues will be about $7 billion. The profit margin is 53 percent.

Mr President, owing to the joint venture we will keep up with the times because the world’s consumption of platinoids is rapidly growing. This is linked with the infamous ‘diesel-gate’ in the United States and Europe, when CO2 emissions were understated and the production of petroleum engines grew manifold in the car industry.

Palladium is a gasoline engine while platinum is a diesel engine. It is electronics, global digitalisation where evaporation is widely used, including platinum-group metals, in various industrial projects – such as chemical and petrochemical industries, production of catalysts, and vehicles manufactured with due account for the new strict CO2 emission requirements. Therefore, I think that this joint venture involving Norilsk Nickel will be marketable and one of the best production facilities in the world.

We are building it in compliance with new environmental requirements. There will be no liquid waste; we will use dry stacking, we will make so-called ‘gypsum,’ so we will not pollute the environment. The Russian Federation will be producing over 50 percent of platinum-group metals. Everybody will be dependent on us.

Vladimir Putin: Sounds good. I can see that the cost recovery is promising. With a total investment of $15 billion, the net profit will be $3.7 billion.

Musa Bazhayev: Isn’t this good?

Vladimir Putin: Excellent.

Musa Bazhayev: The higher the tax payments, the higher the social expenditure.

Vladimir Putin: The project will pay off in just over four years.

Musa Bazhayev: Yes, it is a very good project. Industry experts believe it is one of the best projects since the dissolution of the Soviet Union.

Vladimir Putin: Am I right in thinking that palladium is more expensive than platinum?

Musa Bazhayev: Right now palladium costs $1,800 per ounce. When we started the project, it cost $700. Production of diesel and electric engines made it more expensive, even more expensive than gold. Platinum costs less.

Vladimir Putin: It costs exactly $700.

Musa Bazhayev: Due to some volatility, the price is $900 at the moment. Gold costs around $1,500 while palladium already costs $1,800. The price of our model includes the price of palladium and platinoids ($1,050) – so our pricing was conservative.

Vladimir Putin: This is a very good project.

Musa Bazhayev: It is a very good project. Thank you for ensuring that it is supported by both VTB and the Russian Direct Investment Fund. Thank you so much for giving me this opportunity to take the floor in Riyadh. This was very important for me. Together with RDIF and VTB, we are working to draw our Middle East partners into this project, and Russian Platinum and I are the ones who are driving these efforts. We do believe that this undertaking would be very interesting for them, and that they are ready to work with us proactively. As you have seen, your visit caused quite a stir there.

We would like our actions to be aligned with the country’s policy, and to keep pace with the times. After all, I believe that the private sector should always be there to help, and you can always count on us. Of course, please bear in mind that it is now much harder to operate on the borrowing market, with virtually no lending opportunities abroad. But we have been positive, and working with Russian financial institutions that have been supportive of our undertakings.

Vladimir Putin: Very well. I know that you have quite a few social projects that are interesting and inspiring, both in Russia and internationally. What do we have here?

Musa Bazhayev: Mr President, during our meeting in late 2015, I promised to build the Platinum Arena in Krasnoyarsk for the 2019 Winter Universiade. The project has been completed, and the arena built: 27,000 square metres, 7,000 seats, and a budget of 4 billion rubles. It was completed on time, and it is this arena that hosted the opening and closing ceremonies of the Winter Universiade, as well as figure skating competitions. Today, it is home to the Sokol hockey team, and ice hockey, bandy and figure skating sports schools. In late December 2019, it will host the Russian Figure Skating Championships, and in 2022, the World Wrestling Championships will be held there.

Most importantly (Mr President, I know that when something is built, be it in Sochi or in Krasnoyarsk or elsewhere, but then the facilities are not used, it is always a matter of concern for you), the legacy of the Universiade – the Platinum Arena in Krasnoyarsk is actively used. This year alone, 200,000 spectators visited it.

Vladimir Putin: Thank you.

Musa Bazhayev: And all this has been accomplished.


November 18, 2019, The Kremlin, Moscow