NorNickel Fell for Palladium

The jewelry industry is contemplating to promote palladium as one of the materials being cheaper than gold.
Information agencies and major business editions of Russia report that NorNickel has decided to develop and implement a program aimed at expanding palladium jewelry sales.
NorNickel believes that palladium is seriously underestimated by jewelers, says the “RBC daily.” In this connection the mining-and-metallurgical integrated works in team with other producers of this precious metal has decided to implement a program aimed at expanding palladium jewelry sales. Investments into this project are estimated at tens of millions of U.S. dollars.

Palladium, being a light and pliable material not tarnishing in the air and resistant to scratches and cracks, does not differ much in this quality from other metals belonging to the platinum group. However, it is inferior by its chemical properties being easily dissolved in acids.
NorNickel, the world’s largest producer of palladium, decided to develop and implement a program aimed at expanding the sales of jewelry made of this precious metal. The major activities within the first stage will be shifted to the markets of China and the U.S.A. NorNickel is going to lead these operations assisted by major palladium producers from South Africa - Anglo Platinum, Impala Platinum and Lonmin, as well as the Stillwater Mining Company (U.S.A.).

Anton Berlin, Analysis and Market Development Department Head of the mining-and-metallurgical integrated works, told to the “RBC daily” that the program was aimed at positioning palladium as a jewelry brand. “Palladium is the last precious metal remaining unknown to public at large, at the same time being a light and very strong metal, which corresponds to the requirements of modern life,” he added. Palladium producers intend to cooperate with jewelry designers and sellers through specially established marketing companies. According to Mr. Berlin, the implementation of this program will give to NorNickel proper a more balanced and stable sales framework for this metal. At the same time it may give an impact to development of the whole industry. The aggregate investments into the project by all the participants of this program are estimated at tens of millions of dollars. More exact figures will appear when the business plan will be ready, Mr. Berlin added. Incidentally, it would be wrong to say that palladium was left by jewelers unattended. According to Mr. Berlin’s words, in 2007 the consumption of this metal reached about 260 tons, of which 150 tons were used by the automobile industry and 35-40 tons by the jewelry industry (the second place in terms of consumption).

Vladislav Kochetkov from the Finam Investment Company noted that lately jewelers were more and more turning to palladium, although not treating it as an independent metal, but as a component of the alloy used to produce white gold. Thus, in Russia there are the following assay grades for palladium-containing jewelry alloys – 500 (50.5% of pure palladium) and 850 (85.5%), which also contain silver, nickel and copper. In 2005, jewelry manufacturers increased their demand for palladium by 70% and in 2007 by 40%.

However, experts believe that NorNickel and other companies will manage to turn palladium into a new jewelry brand only if they will be closely working with jewelry manufacturers. According to Vladislav Kochetkov, in many countries there is just no technological basis to manufacture such products. Even in Russia such equipment is possessed only by two factories – in Krasnoyarsk and Yekaterinburg. One has to take into account that the value of such technologies is very high. The analyst has no doubt that in case NorNickel will successfully fulfill the program, its initiative will bring a positive effect to the whole market. “Currently the palladium prices are very volatile and positioning palladium as a jewelry metal will make the market more stable,” he believes.

Meanwhile, Denis Adamsky, CEO of the Moscow Jewelry Plant, doubts the future of palladium as a jewelry brand. “Palladium is more of interest as an investment instrument, for instance in operating the so-called metal accounts,” he explained to the “RBC daily”. “However, I have not seen any jewelry made of palladium.” Anton Berlin is sure that jewelers will be easily convinced to switch over to palladium taking into account the growing gold prices. The current price for palladium is $530 per troy ounce, for gold - $990, for platinum - $2216, the “Kommersant” daily reminds.