MOSCOW Russian mining giant Nornickel, previously known as Norilsk Nickel (GMKN.MM), expects nickel CMNI3 prices to rise to about $10,000 a tonne by the end of the year and flatten out around that level through 2017, its chief operating officer said.
The stainless steel ingredient has been a top performer on the London Metal Exchange this year, with prices up about 30 percent since February lows to $9,730 a tonne.
Its climb has mainly been driven by concern over supplies after mine closures in the Philippines and Indonesia's 2014 ban on nickel ore exports.
"Everyone is keeping an eye on the development in the Philippines and Indonesia," Nornickel's Sergey Dyachenko told the Reuters Russia Investment Summit.
Nornickel expects Philippines and Indonesia to be busy building new infrastructure and modern production for some time.
"This period will certainly lead to some decrease in market supply and will support the metal price," Dyachenko said, adding that it usually takes between four and six years to build up new production.
A Reuters poll showed that analysts expect nickel prices to average $9,106 a tonne this year and $10,920 in 2017.
"We tend to be slightly more conservative," Dyachenko said of his company's view of an $10,000 average next year.
Nornickel, part-owned by Russian tycoon Vladimir Potanin and aluminum giant Rusal (0486.HK), is the world's second-largest nickel producer behind Brazil's Vale SA (VALE5.SA).
Dyachenko said that Nornickel expects second-half financial results to fall short of its performance in the first six months of the year.
The company plans to start production at its new Bystrinskoye gold and copper project in eastern Siberia in about 12 months. It has invested $500 million in the project and needs to spend a further $800 million.
It has already sold a 13.3 percent stake in Bystrinskoye to a consortium of Chinese investors for $100 million and is in talks with other potential Chinese investment partners and producers, Dyachenko said.
"The territory is quite close to China. Many investors are interested in developing this deposit and other territories," he added.
Nornickel is also still considering participation in the Peschanka copper and gold project of billionaire Nornickel shareholder Roman Abramovich and his partners.
The project, based in Russia's far eastern Chukotka region, is top-class in terms of geology, Nornickel said.
"Its further fate will depend on how far it will be able to advance in terms of infrastructure - in energy and transportation," Dyachenko said.
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(Additional reporting by Katya Golubkova, Christian Lowe, Anastasia Lyrchikova and Svetlana Burmistrova; Editing by David Goodman)