Olga Buch: Why Norilsk Nickel is Moving Palladium Production from Norilsk to the Murmansk Region

Norilsk Nickel is restructuring its precious metals production chain. Starting in July 2026, the processing of intermediate products will be transferred from the Norilsk Copper Plant to Monchegorsk in the Murmansk Region. All of the company’s palladium — accounting for 40% of global production — will now be produced in Monchegorsk in the form of concentrate. Commenting is PORTA expert Olga Buch, Doctor of Economics, Professor, and CEO of the Association of Arctic Project Contractors «Murmanshelf».

The intermediate product is roast-leach cake from copper sludge, which is generated during the processing of raw materials at metallurgical plants. It is a solid residue remaining after leaching of the roasted concentrate and contains valuable components for the subsequent recovery of precious metals. It undergoes four processing stages, two of which have lengthy production cycles, high levels of work-in-progress, and are energy-intensive.

The production cycle for precious metal concentrates in Monchegorsk is significantly shorter due to the specific technologies used in the chemical-metallurgical workshop, the recovery rate of precious metals is higher, and work-in-progress is lower. This means that relocating the processing of one of the intermediate products from Norilsk to the Kola Peninsula will improve metal recovery, speed up production, and reduce costs.

The project required modernizing the chemical-metallurgical workshop at Kola MMC: calcining furnaces, filters, tank equipment, pumping stations, and pipelines were replaced. The project includes state-of-the-art gas cleaning systems, reducing the environmental impact on the region. Total investment amounted to approximately 500 million rubles.

Norilsk Nickel is Russia’s primary palladium producer and will remain so, but in Q4 2026, the Chernogorsk Mining and Processing Plant is expected to launch at the eponymous deposit in the Norilsk district, being developed by Chernogorskaya GRK (part of the Russian Platinum group). This will create a second major palladium and platinum production center in Russia. The design capacity of the first phase is up to 9 million tons of ore per year, producing about 250 tons of copper-nickel concentrate containing platinum group metals.

The world’s largest producers of the metal are Russia, South Africa, Zimbabwe, Canada, and the United States. Russia accounts for approximately 40% of global palladium supply. According to forecasts from the World Platinum Investment Council (WPIC), from 2026 to 2030, Russia will maintain its position as the world’s largest palladium producer. According to statistics, Russia mined about 84.8 tons of palladium in 2025. In 2026, the country’s metal production volume is expected to be around 84.1 tons.

The primary use of palladium and platinum is in automotive catalytic converters for exhaust gases, which currently account for more than 80% of demand for these metals. In addition, the metals are widely used in electronics, dentistry, jewelry, and other fields. Palladium’s ability to absorb hydrogen finds application in the chemical industry, making it useful for producing ultra-pure hydrogen. This opens up broad prospects for palladium’s use in hydrogen energy.

For the Murmansk Region, relocating production means new high-skilled jobs, increased tax revenues to the budget, and a strengthening of the region’s economic potential. For the city of Monchegorsk, with a population of about 40,000, this will not only bolster the city’s budget but also increase its active population, consequently spurring additional development of social infrastructure, housing construction, and strengthening the service sector and small and medium-sized enterprises.

Thus, optimizing Norilsk Nickel’s production chain in the Arctic strengthens Russia’s position as a strategic player in the global palladium market. Increasing operational efficiency and reducing processing costs are becoming key factors in the competitiveness of domestic companies, allowing them to maintain profitability even under adverse market conditions.