OREANDA-NEWS. September 27, 2010. The state subcommittee on customs tariff policy under the leadership of First Deputy Prime Minister Viktor Zubkov on Thursday approved the introduction of a 10% export duty on nickel and copper. However, the rate for Norilsk Nickel may be revised by the end of 2010 based upon an analysis of the potential impact of increased taxes on the implementation of its investment and social programs. In addition, it was noted that Zubkov instructed federal executive agencies to arrange appropriate monitoring procedures, reported the press-centre of OTKRITIE Financial Corporation.

View: In our current models, we have assumed that the export duty will be 10% for nickel and for copper (and linked to metal prices) for 2011 and onwards. This costs the company about USD0.45bn annually (based on our current commodity price assumptions). We view the news as neutral, since this 10% export tax was already built into our model (for 2011 onwards).

Valuation and Action: Norilsk Nickel trades on a 2011E EV/EBITDA of 4.8x, which implies a 16% discount to global peers. We reiterate our BUY rating for Norilsk Nickel and a target price of USD220/share.